On June 11, the South Korean government imposed a huge fine of 624.7 billion Korean won (approximately 2.77 billion RMB) on the e-commerce company Coupang, which has its headquarters in the United States. The reason for the penalty was that the company had leaked the personal information of up to 33.7 million users on a large scale.
Yonhap reports that this is the highest fine imposed in South Korea to date for a single information leakage incident, and also the highest fine imposed to date for a single company for multiple violations. The report mentions that at the end of last year, a information leakage scandal involving Kpop caused a huge stir in South Korea. This incident was also considered to have hindered U.S.-South Korea trade negotiations by Vice President Davis of the United States.
The Financial Times believes that the move by the South Korean government may exacerbate the diplomatic disputes between South Korea and the United States regarding technology regulation.
On that day, the South Korean Personal Information Protection Commission stated that after their investigation, they confirmed that KPOP Company had experienced a large-scale information leakage incident, and had illegally collected members' online activity records without any legal basis.
According to reports, the uncooperative behavior discovered during the investigation is also considered a factor that contributes to increasing the fines.
According to the Personal Information Protection Committee, after the investigation began, authorities demanded that Kupeng Company keep evidence, including access records related to this incident. However, the company still manually deleted access logs that had been stored for about five months.
Additionally, reports indicate that after the scandal broke, Kook-Peng conducted extensive lobbying efforts in the United States in order to pressure the South Korean government. Although Kook-Peng denied this, it is confirmed that during the seven-month investigation period, the South Korean government indeed faced pressure from the United States regarding trade disputes.
The South Korean government has stated that it will decide the severity of punishment for Kupeng based on principles.
The South Korean Personal Information Protection Commission stated at the beginning of the year that it would carefully assess the extent of the losses caused to citizens by this incident, and take appropriate measures accordingly. "Factors such as whether this incident could become a variable in trade negotiations were not considered."
A e-commerce company based in the United States, CoolPeng. Image from Korean media.
According to the introduction, Kupeng was founded in 2010 by Kim Bum-seok, a Harvard Business School dropout. In 2021, when the company went public, its headquarters was still in Seoul. Later, the company moved its headquarters to Seattle, transforming itself into an American company. Robert Porter, a former White House assistant secretary, was appointed as the global affairs director. Local South Korean companies believe that Kupeng, while dominating the South Korean market, claims to be an American company, which is unfair.
At the end of last year, a data breach scandal involving Coolpeng affected as many as 33.7 million users, causing a huge uproar in South Korea. In December of the same year, the South Korean police launched an investigation, and the former CEO of the South Korean business resigned. Subsequently, the interim CEO—a American—left South Korea briefly before returning during the investigation by the South Korean police and lawmakers.
subsequently, Kuipeng launched a lobbying campaign in Washington D.C., distributing money generously.
According to Yonhap, the company has not only hired one of Washington D.C.'s most influential lobbying firms, but also signed contracts with three other companies. It is reported that one of these companies can communicate directly with U.S. President Donald Trump. The lobbying targets include various aspects of politics, including Vance, the White House, both the Senate and House of Representatives, the State Department, the Treasury Department, the Office of the U.S. Trade Representative, the Agriculture Department, etc.
According to reports, as of March this year, CoolPeng’s lobbying expenses amounted to $1.09 million.
In January this year, Trump suddenly threatened to impose taxes on South Korea. This sudden incident caused chaos in South Korea.
The US Wall Street Journal reported at the time that this latest tariff controversy might be related to Kupang. Sources familiar with the matter said that just a few days before Trump threatened to impose additional taxes, Vance met with South Korean Prime Minister Kim Min-sik in Washington. He warned South Korea not to target companies like Kupang and other US enterprises, and also urged South Korea to avoid introducing discriminatory regulations or conducting investigations against US technology companies.
In January this year, Prime Minister Kim Min-sik met with Vance. Korean media reported.
In February, South Korean Foreign Minister Zhao Xian, who was visiting the United States, was questioned by U.S. Secretary of State Rubio during their meeting. Rubio pointed out that the U.S. side had a "negative attitude" towards the trade agreement between the two countries.
Initially, it was a corporate scandal that later evolved into a diplomatic incident, according to the *Financial Times*. It is reported that a group of American investors known as Kooko Invest had previously filed a request urging the U.S. government to launch an investigation based on "Section 301" regarding South Korea's "unfair trade practices." They later withdrew their request.
Reports say that this dispute highlights the risks faced by governments in regulating American companies. The Trump administration is increasingly inclined to regard legitimate foreign regulatory actions as ‘non-tariff trade barriers’ and threatens retaliation.
