RESOLVING THE LEDGER
This is one outlet's own report from CNBC — the article as it was filed. Other outlets are covering the same event; open the full story to compare every source side by side.
See the full story · 1 sourcesThe South Korean government's dismissal of the findings of a congressional report alleging it's waged a targeted campaign against U.S.-based Coupang — commonly known as the Amazon of South Korea — is straining the relationship between the two global allies, officials in Congress and people close to the company told CNBC.
CNBC spoke with nearly a dozen people familiar with the Coupang-related tensions, some of whom asked not to be named in order to discuss sensitive matters. The company's representatives and supporters on Capitol Hill say they're seeking a quick end to what they describe as South Korea's campaign against the online retailer. People familiar with the situation raised the specter of retaliation from Congress or the White House, including potentially additional tariffs on South Korea, if the dispute drags on.
The report by the House Judiciary Committee's Republicans alleges the South Korean government waged an unprecedented offensive on Coupang — which is headquartered in Seattle and does the bulk of its business in South Korea — over a data breach that the company maintains was minimal.
The South Korean government disagrees on the scope of the breach and has said consumers in the country faced potential harm from their personal details being exposed. It held hearings, threatened criminal charges against Coupang's interim CEO, and levied a record-breaking data-privacy fine on the company.
"This isn't about just some commercial dispute," Chris Stewart , a former Republican congressman from Utah and president of lobbying firm Skyline Capitol, which has a consulting relationship with Coupang, told CNBC about the Coupang issue. "Policymakers, leaders in Congress and the White House understand this is really about the relationship between two key allies."
"The worst thing that could happen is if we get into a tit-for-tat environment, where [the U.S. seeks] to punish Korea in some way or tie this to an increase in tariffs. That's not my hope or desire at all," he said. But if South Korea doesn't back down, he said, "ultimately the president has the power of tariffs, which can be very powerful."
The South Korean government, through its embassy in Washington, said its alliance with the U.S. is "stronger than ever" and criticized the congressional report, which the Judiciary Committee released in July, as largely reflecting only Coupang's claims.
"The Korean Government has consistently engaged with members of the U.S. Congress and officials of the U.S. administration to explain our position regarding the Coupang matter, and we will continue these efforts going forward," a spokesperson for the embassy said.
The Coupang dispute is unfolding against a broader backdrop of friction in the crucial U.S.-South Korea alliance.
President Donald Trump on Aug. 16 said he would scale back annual military drills with South Korea. Asked in late August if the move was related to Coupang, a White House official, who asked not to be named in order to discuss the dispute, told CNBC via email that "there is no direct connection."
Still, the official cited a Trump executive order from last year that targets foreign governments that the administration says are overregulating U.S. technology companies.
"This is not a new focus or issue. That said, the Korean government has been misaligned with us on a number of bilateral issues," the official said.
Sen. Bernie Moreno , R-Ohio, last week sent a letter to U.S. Trade Representative Jamieson Greer urging a formal investigation into South Korea, and potentially additional tariffs on the country, over its treatment of Coupang in the aftermath of the data breach, which he called a "regulatory crusade."
"This specific data breach deserves investigation and may warrant even-handed enforcement. However, the larger pattern emerging in South Korea is cause for intense concern. Seoul has weaponized a small incident into a pretext for widespread weaponization against American enterprise," Moreno wrote.
Coupang spokesperson Erika Reynoso declined to comment on the prospect of tariffs or the specifics of South Korea's response.
"We regret the circumstances that led to a congressional investigation, but we acknowledge the Committee's thorough work to bring the facts to light. We continue to seek a constructive resolution that will strengthen the US-ROK alliance," Reynoso said in a statement, using an abbreviation for the Republic of Korea.
But there is pressure on the U.S. government to act.
In January, two Coupang investors — venture capital firm Greenoaks Capital Partners and tech investment firm Altimeter Capital — petitioned Greer to open a Section 301 investigation into whether the South Korean government was discriminating against the company and to assess additional tariffs. Section 301 of the Trade Act of 1974 allows the U.S. Trade Representative to investigate unfair foreign practices affecting U.S. commerce.
No official investigation has been announced. A spokesperson for Greer did not respond to requests for comment. Marney Cheek, of law firm Covington & Burling, who has represented both investors in the case, also did not respond to a request for comment.
Greenoaks is Coupang's No. 2 shareholder after SB Investment Advisers, holding about 55.3 million shares or 3.38% of shares outstanding, according to FactSet data. Altimeter reported no Coupang holdings as of March 31, after selling its position of roughly 15.7 million shares.
While Trump has not indicated he would pursue an additional tariff investigation, those close to the situation pointed to his repeated commitments to protecting U.S. firms abroad.
"President Trump has been very vocal about fairness for American companies and not getting ripped off," Rep. Michael Baumgartner, R-Wash., who sits on the House Judiciary Committee, said when asked about the potential of retaliatory tariffs stemming from the Coupang dispute . "So yeah, I think [Trump's response] could be significant."
S...
AIPROPX is an independent multi-source news index — we track, compare, and connect coverage from across the web into one place you won't find anywhere else.