A recent report from the House Judiciary Committee alleges that South Korea has systematically discriminated against American tech companies, favoring competitors with ties to China. The report highlights the case of Coupang, a Seattle-based e-commerce platform, which faced significant scrutiny and a record-breaking fine following a data breach.
According to the report, a Chinese national, a former senior engineer at Coupang, accessed and stole customer data over several months. Coupang's security team confirmed the breach in November and reported that approximately 3,000 accounts were accessed. The company stated that a former employee admitted to stealing an authentication key to gain unauthorized access to the data.
Covert Data Recovery Operation
The committee report details an alleged covert operation in China. In December, Coupang was reportedly instructed by South Korea's National Intelligence Service (NIS) to retrieve a laptop containing the stolen data, which was located at the bottom of a river in China. Coupang subsequently deployed a dive team that recovered a damaged laptop from a muddy river in China.
Following the incident, Coupang CEO Park Dae-jun resigned, and Harold Rogers was appointed interim CEO of Coupang Corp., the South Korean subsidiary. Rogers testified under oath before the South Korean assembly that the NIS had instructed the company to retrieve the stolen data. The Judiciary Committee report supports this claim. However, South Korean officials denied instructing Coupang to enter Chinese territory for the recovery.
South Korean officials criticized Rogers for his testimony, and the government later denied providing such instructions. Documents cited in the committee report indicate a meeting where Coupang executives were allegedly told they were part of a joint government investigation and were legally required to cooperate with the NIS. Following these events, South Korean officials called for Rogers to be charged with perjury.
Historic Fine and Allegations of Discrimination
In June, Coupang was fined approximately $410 million by South Korea for privacy violations, the largest such fine in the country's history. The Judiciary Committee report alleges that South Korea's Korea Fair Trade Commission (KFTC) has been aggressive in using competition policy to target American companies, leveraging digital laws and regulations to limit their operational success.
A spokesperson for Coupang Inc. expressed regret over the circumstances and a commitment to finding a constructive resolution to strengthen U.S.-Korea alliance and trade. However, an embassy spokesperson for the Republic of Korea stated that the country is committed to a fair business environment for all companies and that the House Judiciary Committee report appears to be based on Coupang's assertions. The spokesperson added that the penalties were imposed in accordance with Korean law and that Coupang was given due process with the right to challenge the decision in court.
Coupan's stock has reportedly declined significantly since the data breach was announced and the fine was imposed. The House report suggested this decrease has negatively impacted U.S. investors, including public pension funds and individual retirement savers.
Political Context
The report comes amid claims by over 50 House lawmakers, led by Rep. Darrell Issa, that South Korea's current left-leaning government, which took power after the impeachment of conservative President Yoon Suk-yeol in December 2024, is aligned with China and hostile to American businesses. Issa stated that the current government has begun attacking American companies, suggesting Coupang, founded by a Korean-American, is being targeted because it is an American firm. He also noted South Korea's adoption of European digital rules, which he suggested are designed to localize markets rather than embrace successful global companies.
Concerns about potential economic repercussions have been raised, with a Competere Foundation model estimating a $525 billion loss in economic activity over the next decade for U.S. states if South Korea continues implementing policies deemed harmful to U.S. businesses. Proposed legislation in South Korea's assembly could further expand the power of the KFTC, the agency criticized by members of Congress.
South Korea's embassy spokesperson reiterated the government's commitment to its strategic partnership with the United States and engagement with the U.S. Congress to strengthen bilateral economic ties.