US raises concerns as Korea steps up scrutiny of US-listed Coupang

Coupang's headquarters in Seoul (Im Se-jun/The Korea Herald)
Coupang's headquarters in Seoul (Im Se-jun/The Korea Herald)

The data breach of over 33 million Coupang users has reignited Korea’s push for enacting new legislation to restrain monopolistic online platforms, a move with which the United States has expressed discontent.

According to media reports on Wednesday, the National Policy Committee is weighing options to restart the enactment process of the tentatively named Fair Online Platform Intermediary Transactions Act in the wake of Coupang’s data breach that sparked public outrage. The backlash intensified last week after Coupang founder Bom Kim failed to attend the parliamentary hearing.

The National Assembly initially aimed to enact the legislation in the first half of this year but the process has been stalling since the US opposed the idea of potentially curbing its big tech companies during the tariff negotiations.

On top of the National Assembly putting pressure on the Korean e-commerce giant, Seoul has formed a pan-governmental task force to deal with the Coupang incident. The task force, which includes several ministries and agencies, held its first meeting Tuesday in Seoul.

“Recognizing the Coupang incident as a serious social crisis that undermined public trust, the government plans to quickly investigate the cause of the accident, identify responsibility, protect users and strengthen corporate social responsibility,” said Ryu Je-myung, second vice minister at the Ministry of Science and ICT, who leads the task force.

“The government will stand by the people and identify Coupang's problems until suspicions and anxiety are resolved, and hold them accountable until the end.”

The National Tax Service and a team of special prosecutors also rolled up their sleeves to join the government-wide efforts to investigate Coupang as it raided the headquarters of Coupang Fulfillment Services in Seoul on Tuesday.

The tax authorities reportedly sought evidence of tax evasion after suspicions were raised over Coupang’s ownership structure: US-listed Coupang Inc. owns a 100 percent stake of Korean Coupang, which then holds a 100 percent stake of Coupang Fulfillment Service.

The special prosecutors are investigating Coupang's alleged bending of regulations to avoid paying severance to workers and its supposed efforts to shut down a separate government probe.

However, the pressure on Coupang has raised concerns over the stalled trade talks between Korea and the US.

“The National Assembly’s aggressive targeting of Coupang will set the stage for further (Korea Fair Trade Commission) discriminatory measures and broader regulatory barriers towards US firms,” said Robert O’Brien, who served as US national security adviser during the first Trump administration between 2019 and 2021, in an X post on Wednesday. “Trump has worked hard to rebalance the trade relationship with Korea and it would be very unfortunate if Korea undermines his efforts by targeting US tech firms."

The United States Trade Representative’s office cancelled a closed-door meeting with its Korean counterparts to discuss the specifics of a free trade agreement and follow up on the tariff agreement between the two countries in Washington on Dec. 18, a day after the Korean National Assembly held a hearing against Coupang in Seoul.

American political media outlet Politico reported that the canceled meeting came as “Korean lawmakers introduced new digital legislation and held an explosive hearing on a data breach at Coupang.”

The report also said USTR Jamieson Greer had told Korean officials that the US might resort to renewed trade fights if Korea continues to pursue legislation the Trump administration views as harmful to US tech firms.

However, the Korean side said the meeting was not canceled but postponed due to time constraints, and they are continuing talks with a goal to hold a meeting early next year.

Coupang Inc., the parent company that wholly owns Korea’s Coupang, has spent about $16 billion in lobbying activities in the US since August 2021, five months after it was listed on the New York Stock Exchange, targeting not only Congress but also the White House and the USTR’s office.


hwkan@heraldcorp.com