Proposed legislation in South Korea could lead to an estimated economic loss of $525 billion for U.S. states over the next decade, according to a model from the Competere Foundation. The Online Platform Fairness Act, championed by South Korea's left-leaning government, is facing scrutiny from over 50 U.S. House lawmakers who argue it unfairly disadvantages American tech firms and favors competitors with ties to China.
The legislation, spearheaded by the Korea Fair Trade Commission (KFTC), has gained traction in South Korea under President Lee Jae-myung. The Competere Foundation's model projects significant economic repercussions for several U.S. states, including an estimated $123 billion loss for California, $48.7 billion for Texas, $33.9 billion for New York, and $27.4 billion for Washington.
Rep. Darrell Issa, R-Calif., a leading critic of the proposed law, stated that South Korea's actions are troubling for an ally and an economic success story. He expressed concern that the KFTC's current approach resembles regulatory bodies focused on restricting American companies rather than promoting free markets. Issa also suggested that South Korea's current leadership is "closely aligned with China."
South Korea's political landscape shifted in 2025 with the election of President Lee Jae-myung of the Democratic Party, which holds a substantial majority in the National Assembly. This followed the impeachment of conservative President Yoon Suk-yeol in late 2024.
Economist Shanker Singham, CEO of the Competere Foundation, noted that South Korea is already an increasingly challenging environment for U.S. companies, and the proposed regulations are expected to exacerbate this trend.
Former Rep. Chris Stewart also warned that South Korea's regulatory actions against U.S. companies could have strategic implications beyond economic impact. He argued that by creating hurdles for American innovators, South Korea opens opportunities for Chinese companies to increase their market share and influence in a critical digital economy. The economic fallout, he noted, could extend beyond the tech sector.
Concerns about South Korea's business practices were also highlighted in a recent editorial and a letter sent by House members to the Republic of Korea (ROK) Ambassador to the United States. The letter cited research indicating that such regulatory actions could result in a combined economic damage of $1 trillion to both the U.S. and Korean economies over the next 10 years, with American households potentially losing nearly $4,000 each.
Separately, South Korea recently fined Coupang, a U.S. tech company comparable to Amazon, approximately $410 million for a data breach. The South Korean science ministry stated that a former Coupang employee of Chinese nationality allegedly stole data and customer information. A spokesperson for the South Korean embassy maintained that the investigation and fine were proportionate to the data breach and consistent with penalties applied to domestic companies in similar cases.