How a dispute over e-commerce giant Coupang is testing Korea-U.S. ties

South Korea’s decision to fine e-commerce firm Coupang over a data leak has drawn criticism from Washington and raised questions about the country’s openness to U.S. tech, fueling concerns that the matter is impacting Seoul’s relations with the United States.

The tensions surrounding Coupang, which is Korea’s biggest online retailer, though it is based in Seattle, have become serious enough that Kang Kyung-wha, Seoul’s ambassador to the United States, returned to the capital on Wednesday for consultations with officials in President Lee Jae Myung’s administration.

“The [Coupang] issue is dragging on much longer than I expected,” Kang said to local media when asked about U.S. criticism on the issue. She added the matter would be dealt with separately from other bilateral items agreed upon by the two countries.

At stake is a $350 billion South Korean pledge to invest in the United States, Seoul’s aspiration to build nuclear-powered submarines and ⁠coordination on China and North Korea.

On top of the Coupang support from U.S. congressional Republicans, South Korea has been criticized by the U.S. State Department for amending its communications laws to increase financial penalties on content publishers, which have been found to spread false information online.

The U.S. State Department said that it had “significant concerns” that the changes could enable excessive content regulation ⁠and undermine free speech. The amendments will affect local platforms, as well as Google, Meta, X and TikTok.

South Korean lawmakers told Reuters that they are concerned that Washington is using the Coupang case as a test of Seoul’s openness to U.S. business, rather than treating it as a domestic privacy dispute.

“This is not discrimination against a U.S. company,” ruling Democratic Party lawmaker Park Sun-won said. “It was action over a personal data leak affecting 35 million people. It would be the same for any company.”

Another ruling party lawmaker, Kim Young-bae, said that treating the Coupang dispute as proof of an anti-U.S. bias misreads both the facts and the broader direction of the alliance.

Seoul’s Ministry of Foreign Affairs has also said that the Coupang matter should not be linked to ongoing security negotiations, including South Korea’s ambitions to build nuclear-powered submarines, a plan that U.S. President Donald Trump endorsed last December.

When asked about the Coupang dispute, a State Department spokesperson said South Korea “should not impose disproportionate burdens on U.S. companies.”

The White House did not immediately respond to a request for comment.

Coupang referred to its past statements and said that it hoped for ⁠a constructive resolution.

A source close to the Coupang negotiations who did not want to be identified publicly due to the sensitivity of the situation said the company had repeatedly sought a “constructive off-ramp” with Seoul “literally hundreds of times over the last seven months.” Its requests included what it called a fair technical review and an appropriate penalty.

The dispute began in November 2025 after Coupang ⁠said it suffered a data leak that impacted more than 33 million customers ⁠after an ex-employee in China accessed its systems.

In June, South Korean regulators fined Coupang 625 billion won ($422 million) and said that the penalty sought to protect consumers. Coupang, in turn, has said that it intends to challenge the fine because regulators have overlooked the corrective steps that it has taken.

Subsequently, Coupang received support from some U.S. Republicans who criticized the South Korean government’s actions.

A report from the U.S. House Judiciary Committee this month accused South Korea of discriminating against U.S.-owned businesses, with Seoul having weaponized its regulations against Coupang and other companies.

South Korea’s presidential office rejected those claims and said that the report ⁠disproportionately reflected Coupang’s position and neglected Seoul’s.

A House Judiciary Committee spokesperson told Reuters that Seoul’s response showed that “South Korea is acting just ⁠like other foreign governments that have been caught targeting and harassing innovative U.S. companies.”

Kim Joon-hyung, a lawmaker with the minor Rebuilding Korea Party, said that some people in the United States were conflating the business-related complaints about Coupang and changes in the communications law with accusations of election fraud, which members of South Korea’s far right have levied against Lee.

In June, an op-ed published in the Wall Street Journal by two American conservatives said that the Lee administration is undermining the U.S.-South Korea alliance, citing the Coupang case as an example, and also accused it of pushing constitutional revisions to rule indefinitely.

The article drew criticism from South Korean officials and the presidential office.

“This time the problem is more serious because it is combined with extreme claims — and it is being done organizationally,” Kim Joon-hyung said.

Reuters