Seattle-based e-commerce giant Coupang, often referred to as the "Amazon of South Korea," was allegedly compelled by South Korean government officials to undertake a perilous operation to recover a stolen laptop from the bottom of a river in China. This incident, detailed in a House Judiciary Committee report released on Wednesday, is presented as a significant example of data privacy regulations in South Korea allegedly targeting American technology firms.
According to the report, Coupang believed it had no alternative but to hire scuba divers for the recovery mission. This action was allegedly prompted by pressure from top South Korean regulators investigating a November data breach that affected 33 million customers. The report claims that high-ranking government officials, including the president, were aware of and instructed Coupang on the operation. Evidence cited includes messages from a senior government aide and a signed letter from the National Intelligence Service (NIS) dated December 2, affirming Coupang's legal obligation to comply with orders.
Coupang faced a barrage of investigations from 11 South Korean agencies, threats of travel bans for its executives, and potential fines up to 10% of its global revenue. On June 11, South Korea's Personal Information Protection Commission fined Coupang $410 million for illegally harvesting customer data.
The incident originated from a data breach reported on November 27, where a rogue Coupang employee, a Chinese national, allegedly extracted personal data of 3,000 customers and fled to Shanghai. The employee reportedly confessed and agreed to turn over devices but claimed to have discarded a laptop into a Shanghai river. The NIS allegedly instructed Coupang that its agents could not retrieve the laptop directly due to Chinese law prohibiting foreign intelligence operations on its soil, ordering Coupang to send its own employee to collect the devices.
A Coupang representative traveled to Shanghai on December 17 to meet the suspect and retrieve devices, including a desktop PC, hard drives, and a confession. However, the NIS reportedly insisted on the recovery of the missing laptop the following day. Coupang then hired a scuba diving team to retrieve the device from the river.
Following the recovery, the NIS and South Korean government allegedly denied any involvement, a claim the House Judiciary report disputes, citing documentary evidence and testimony. Coupang's interim CEO, Harold Rogers, stated he would not have authorized such an operation without a firm belief in a legal obligation to do so. Between December 1 and December 26, the NIS reportedly had over 230 phone calls and several in-person meetings with Coupang regarding the recovery plan.
Coupang's CEO faced scrutiny in late December during hearings at South Korea's National Assembly. When Rogers testified that Coupang followed the NIS's instructions, he was allegedly threatened with perjury charges and a potential travel ban, which remain pending. The NIS has publicly denied Coupang's claims, calling them "completely false."
The report suggests this operation is part of a broader effort by South Korea to impede American tech firms perceived as threats to domestic companies. Google Maps is banned in the country, and other US tech giants like OpenAI, Meta, Apple, and Netflix have faced regulatory scrutiny. The report characterizes these actions as South Korea "weaponizing digital laws and regulations to hinder the ability of innovative American companies to effectively compete in its market."
South Korean President Lee Jae-myung had previously stated that companies violating data security rules should face severe penalties. Compared to fines levied against South Korean firms like SK Telecom and Kakao for data breaches affecting millions of customers, Coupang's $410 million fine is notable. Coupang maintains that cybersecurity experts found the breach to be minor and not harmful to customers.
Coupang expressed regret over the circumstances and a commitment to resolving the issue to strengthen US-Korea relations. Secretary of State Marco Rubio has warned that US companies are facing "targeting in South Korea," impacting trade agreement discussions. Lawmakers from both parties have voiced support for Coupang, with over 50 Republicans criticizing South Korea's regulatory tactics in April. Former officials have described the treatment of Coupang as disproportionate compared to how Korean and Chinese companies have been handled in similar situations.