U.S. Officials Voice Concerns Over Alleged Discriminatory Treatment of Coupang
As the government’s investigation into Coupang’s massive data breach continues into the new year, concerns are emerging over potential trade friction between South Korea and the United States. With the Fair Trade Commission and other government bodies, as well as lawmakers, ramping up all-out pressure on Coupang, voices from the U.S. political and business communities are raising concerns about “discriminatory treatment.”
According to industry sources on January 26, Coupang was fined by the Ministry of Food and Drug Safety on January 20 for violating Article 20, Paragraph 2 of the Special Act on Imported Food Safety Management (import declaration, etc.). The penalty was imposed on the grounds that, between April 2 and July 4, 2024, Coupang reported the location of overseas manufacturing facilities incorrectly when importing food products. The violation was detected on January 12, and compared to previous cases where it typically took several months from confirmation of a violation to administrative action, Coupang was sanctioned in just eight days.
With the government’s comprehensive pressure on Coupang, the issue became a key topic during Prime Minister Kim Minseok’s recent visit to the United States. After meeting with U.S. Vice President J.D. Vance, Prime Minister Kim told domestic correspondents that “Vice President Vance expressed curiosity about what specifically was at issue, saying he fully understood that Coupang, as an American company, faces a different environment in Korea.” Kim continued, “I made it clear that there has been no discriminatory treatment against American companies regarding the Coupang issue, and Vice President Vance responded that he assumed there must have been some legal issue under the Korean system and expressed his understanding.” Kim added, “Vice President Vance requested that both governments manage the situation well so that it does not lead to misunderstandings or escalate unnecessarily.”
Previously, Coupang’s investors, Greenoaks and Altimeter, requested that the U.S. Trade Representative (USTR) investigate the Korean government’s actions regarding Coupang and take appropriate trade remedies. The investors argued that the Korean government’s intensive investigation into Coupang following the data breach had caused significant losses for shareholders. They also submitted a notice of intent to arbitrate under the Investor-State Dispute Settlement (ISDS) mechanism, as provided by the Korea-U.S. Free Trade Agreement (FTA). ISDS is a legal remedy that allows foreign investors to claim damages from a host government if they suffer investment losses due to government actions.
Earlier, Yeo Han-koo, head of trade negotiations at the Ministry of Trade, Industry and Energy, also met with USTR representative Jamieson Greer at the World Economic Forum (WEF) in Davos, Switzerland, from January 19 to 22 (local time), and conveyed that the domestic investigation into Coupang does not constitute discriminatory treatment against an American company and should not escalate into a trade dispute.
Some in the U.S. investment community have voiced frustration, claiming that the Korean government is excessively targeting Coupang, an American company. A notable example is Joe Lonsdale, co-founder of U.S. artificial intelligence software company Palantir, who posted on his social media that “the Korean government’s pressure on an American company is a serious mistake,” adding, “Discrimination and harassment cannot be tolerated.”
Such responses appear to stem from the perception that the Korean government and political circles are responding to Coupang’s data breach in an unusual and excessive manner. Currently, more than ten government agencies-including the Ministry of Science and ICT, the Personal Information Protection Commission, a joint public-private investigation team, the police, the Financial Supervisory Service, the National Tax Service, the Fair Trade Commission, and Seoul Main Customs-are conducting a comprehensive investigation into Coupang. The investigation covers not only the data breach but also alleged cover-ups of industrial accidents, tax evasion, corporate governance issues, and lobbying activities both domestically and internationally. In the political arena, following a joint hearing on Coupang held by six standing committees at the end of last year, both ruling and opposition parties have sequentially submitted requests for a parliamentary inquiry into Coupang.
The prevailing view is that this is a response to Coupang Inc. founder and board chairman Bom Kim’s repeated refusal to appear before the National Assembly, as well as Coupang’s perceived lukewarm response in the early stages of the incident-a so-called “crime of disrespect.” There have been no similar cases where the government or political circles have conducted such a wide-ranging investigation into other companies involved in data breaches, such as domestic telecom operators or Chinese e-commerce platforms.
Even within Coupang, calls have emerged urging the government to conduct a “rational and fair investigation.” The Coupang labor union, composed of directly employed delivery drivers known as “Coupang Friends,” stated, “We have no intention of defending the company’s data breach or minimizing responsibility,” but emphasized, “Excessive sanctions that go beyond the scope of data protection responsibility could seriously damage the company’s operations. As a result, jobs for frontline delivery and logistics center workers could disappear, cutting off sales channels for countless small businesses and threatening the livelihoods of tens of thousands of families. Such a situation must be avoided.” The union added, “Because a single decision affects not only the company but also the lives of many frontline workers, we earnestly hope for prudent and balanced judgment from multiple perspectives.”
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