U.S. Investors Call for Investigation into South Korea's Treatment of Coupang

In November 2022, Coupang, a leading South Korean e-commerce company, reported a significant data breach affecting the personal information of approximately 33 million customers. The breach has led to widespread criticism from lawmakers and the public, prompting investigations and lawsuits from both consumers and investors. Following the incident, two major U.S. investors, Greenoaks Capital and Altimeter Capital, accused the South Korean government of discriminatory treatment towards Coupang, claiming that the government's response to the breach has been excessive and damaging to their investments.

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During a recent visit to the United States, South Korean Prime Minister Kim Min-seok addressed concerns raised by U.S. lawmakers regarding Coupang. He firmly stated that there is "absolutely no discrimination against Coupang," emphasizing that the U.S.-Korea relationship is built on trust. Kim's remarks came in response to allegations from Greenoaks and Altimeter, who have petitioned the U.S. government to investigate South Korea's actions and consider imposing trade remedies under the U.S.-Korea Free Trade Agreement (KORUS). The investors argue that the South Korean government's response has included a "whole-of-government" approach that unfairly targets Coupang, leading to billions in losses.

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South Korea's Trade Minister Yeo Han-koo reiterated that the government is not discriminating against Coupang and suggested that U.S. officials may have misunderstandings regarding the situation. He characterized the data breach as "unprecedented" and stated that Coupang's inadequate response should be viewed separately from trade and diplomatic issues. In light of the allegations, Greenoaks and Altimeter have filed arbitration claims against South Korea, seeking to restore fair business conditions for U.S. companies operating in the country.

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Critics, including U.S. Senator Mike Lee, have described the South Korean government's actions as "unprecedented persecution" of Coupang and its executives. Lee emphasized the importance of fair access to the Korean market for U.S. companies and warned that continued harassment could have serious diplomatic and economic repercussions. Other voices, such as Joe Lonsdale, founder of Palantir, have expressed concerns that South Korea is adopting tactics reminiscent of those used by China to favor domestic competitors over U.S. firms.

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The U.S. Trade Representative (USTR) has a 45-day window to decide whether to launch a formal investigation into South Korea's handling of the situation. If initiated, this could lead to public comments, hearings, and potential U.S. countermeasures, including tariffs on South Korean goods and services. The ongoing dispute highlights the complexities of international trade relations and the potential impact of regulatory actions on foreign investments.

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• “There ?is absolutely no discrimination against Coupang. The U.S.-Korea relationship is based on trust, so there's no need to worry about discriminatory treatment,” — Kim Min-seok, South Korean Prime Minister

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• “Our main concern is the scale and speed of the government’s response, which has led to significant damages and threatens the value of our investment,” — Marney Chee, Partner at Covington, representing Greenoaks

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• “If ?a Korean company doing business in the U.S. caused such a large-scale information leak in the U.S., the U.S. would naturally do the same, and I clearly explained this and U.S. officials understood that,” — Yeo Han-koo, South Korean Trade Minister

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This situation continues to evolve, with potential implications for U.S.-South Korea trade relations and the future of Coupang as a key player in the e-commerce sector.

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