South Korea’s Government Pressure on Coupang Raises Concerns
Reports indicate that the South Korean government compelled a U.S.-based online retailer to undertake a risky endeavor to recover stolen laptops from a river in China. This incident surfaces amid a broader crackdown on data privacy laws, with U.S. officials flagging it as a troubling instance of South Korea’s anti-American tech regulations getting out of hand.
A House Judiciary Committee report revealed that Coupang, often referred to as the “Korean Amazon,” was driven to recruit scuba divers for an operation reminiscent of a spy movie, following a major data breach that impacted 33 million customers. It seems the company felt cornered when South Korea’s top regulatory body initiated an investigation in the wake of the breach.
While South Korea’s National Intelligence Service distanced itself from the operation, Coupang gathered significant evidence contradicting this, including messages from senior officials indicating that the president was briefed on the recovery mission.
The report stated, “The highest levels of the South Korean government, including President Lee Ja-myung himself, were aware that the National Intelligence Service closely directed Coupang regarding recovery operations.” It appears that Coupang is now facing 40 investigations from 11 different agencies, with executives potentially facing bans on travel and hefty fines that could reach 10% of global revenue. Just recently, the Personal Information Protection Commission ruled that Coupang illegally collected customer data, resulting in a fine of $410 million, which is almost double last year’s earnings.
The December mission targeted a Coupang employee who was allegedly involved in the data breach and had fled to Shanghai, taking personal information from around 3,000 customers. According to a 35-page report, Coupang made contact with this employee, who admitted to his actions but panicked and disposed of the laptop in the river.
The National Intelligence Service informed Coupang of Chinese laws preventing foreign intelligence operations on its soil, directing the company to send its team to retrieve the equipment. They were also required to collect fingerprints of the involved employee under the watchful eyes of Chinese authorities.
On December 17, Coupang’s officials traveled to Shanghai, where they met with the suspect and his attorney, delivering a desktop computer and other devices along with a signed confession. However, the next day, the NIS insisted that the laptop still needed to be retrieved.
In response, Coupang assembled a diving team to recover the device from the murky waters. The materials gathered—including equipment, confessions, and fingerprints—were ultimately handed over to representatives from the NIS, who then transported everything to the South Korean Consulate General in Shanghai. Notably, Coupang employees were instructed to ensure no surveillance cameras captured the scene.
After the risky retrieval operation concluded successfully, Coupang was reportedly taken aback when South Korean officials denied any participation in the endeavor, highlighting a disconnect in accountability.
Harold Rogers, Coupang’s interim CEO, indicated to House judiciary officials that the company’s actions were conducted under perceived legal obligation, asserting, “We never authorized our employees to travel to China.” Evidence also suggested that the National Intelligence Service had documented communications establishing a legal need for Coupang to follow directives related to the data breach.
Despite this justification, Rogers faced scrutiny during public hearings, where his comments regarding cooperation with the NIS led to threats of criminal perjury charges and possible travel restrictions, which remain unresolved at this time.
The NIS publicly refuted Rogers’s claims, stating they were “completely false,” which the House Judiciary report suggested was at odds with available evidence.
Allegations in the report characterized the operation as part of South Korea’s overarching strategy to undermine U.S. technology firms perceived as competition. Notably, several other American companies, including Google, Apple, and Netflix, are currently under investigation by South Korean regulators.
Kate Kartkiewicz, a former trade policy director, noted that such a situation is particularly alarming when considering how South Korea is escalating pressure on American companies, highlighting how this could impact future trade relations. President Lee Jae-myung has even hinted that severe penalties could befall companies breaching data security regulations.
In stark contrast, other South Korean firms have faced lighter consequences for data breaches, raising questions about the proportionality of regulatory responses. Coupang maintains that cybersecurity experts concluded the breach was minor and caused no real harm to customers.
In a statement, Coupang expressed regret over the circumstances that led to scrutiny by the House Judiciary Committee, emphasizing a commitment to resolving issues and strengthening U.S.-South Korea ties.
Concerns about targeting U.S. companies in South Korea have also been echoed by Secretary of State Marco Rubio, who noted how this is negatively affecting trade negotiations. Bipartisan support in Congress seems to rally behind Coupang, with various lawmakers denouncing South Korean regulatory practices in letters to officials.
Demetrios Marantis, a former acting U.S. trade representative, labeled South Korea’s treatment of Coupang as unprecedented in his three-decade career, underscoring the discrepancies in how the South Korean government addresses similar issues affecting local and Chinese firms.
Requests for comment from South Korean officials have gone unanswered.
