Last November, President Trump and his South Korean counterpart, Lee Jae Myung, unveiled a landmark investment and security deal, pledging to open a new chapter in the seven-decade alliance between their nations. Six months on, that bonhomie has turned into gridlock.
At the center of the impasse, according to the South Korean side, sits an unlikely flashpoint: Coupang, often called the “Amazon.com of South Korea,” and its Korean American founder, Bom Kim.
The trouble began with a data breach last year at the company that affected 33 million customer accounts in South Korea. Regulators started an investigation that quickly escalated into a test of the country’s relationship with Washington because Coupang — South Korea’s largest online retailer — is actually incorporated in the United States.
Coupang accused the Korean government of weaponizing regulatory inquiries against an American firm, and sought support in Washington, saying that U.S. firms were being treated worse in South Korea than Chinese ones. Korean officials said the scrutiny was following “due process.”
In a letter to South Korea’s ambassador in Washington last month, 54 Republican lawmakers warned that the government’s “targeted and discriminatory” treatment of Coupang and other U.S. tech companies threatened American economic and security interests.
“If your government’s current efforts to push American companies from the country’s online retail market succeeds, then the vacuum would quickly be filled by Chinese platforms like Temu, Alibaba and Shein,” they said. “Their dominance in the region would have unacceptable security consequences.”
During a Senate confirmation hearing on Wednesday, Michelle Steel, Mr. Trump’s pick to be the U.S. ambassador to South Korea, was asked about the accusations. She said the November deal banned any such discrimination.
“I’m going to follow up with that clearly,” she said.
The response from South Korea was swift.
“This is a clear case of interference in domestic affairs and is unacceptable,” said Woo Won-shik, the National Assembly speaker, referring to the letter from American lawmakers. Dozens of South Korean lawmakers signed a letter to the U.S. Embassy in Seoul warning that American pressure “calls into question the integrity and foundations of the alliance itself.”
Mr. Lee and Mr. Trump had sealed their deal with big smiles and exotic gifts. But there is still no sign of the hundreds of billions of dollars that South Korea had committed to investing in American shipbuilding and other industries. And talks about a pledge from Mr. Trump to help the country build nuclear-powered submarines have barely begun.
Wi Sung-lac, Mr. Lee’s national security adviser, has publicly said that “the Coupang problem is affecting security consultations.”
At the heart of the storm is Mr. Kim, who started Coupang in South Korea, his country of birth, in 2010.
While its “Rocket Delivery” trucks have become part of the urban fabric in South Korea, Coupang points out that it remains an American firm. Koreans see Coupang as Korean because it makes most of its money in Korea.
The identity clash exploded after the data breach that began last June but is said to have gone undetected until November. Coupang said it has since fully cooperated with government officials in the investigation, tracking a former employee to China and retrieving a laptop he had used in the breach from the bottom of a stream.
It apologized several times, and the head of its Korean subsidiary resigned and was replaced by an American executive, Harold Rogers.
But in Korea’s hierarchical society, officials and the public expected the ultimate boss to take responsibility. That meant Mr. Kim, the chief executive of Coupang’s U.S.-listed parent company. When he finally issued an apology on Dec. 28, later offering $1.1 billion in Coupang coupons in compensation, it was dismissed as too little, too late.
“Bom Kim is staying in the shadows, so-called shadows, and putting forward the U.S. representative who doesn’t speak the language, metaphorically and literally,” said Junghee Cho, a partner at D.Code Law Group. “It gives the impression that they are trying to evade responsibility.”
(Mr. Kim, who emigrated to the United States at a young age, uses English in media appearances and investor calls. But his written apology was delivered in Korean.)
South Korean regulators, who deny any discrimination, had already started investigations into alleged antitrust violations, taxation issues and labor conditions at Coupang. Mr. Kim infuriated South Korean legislators by refusing to attend a hearing to answer questions.
The Coupang dispute, to many in South Korea, is a sign of a persistent gap in trust in the alliance with the United States. Many South Koreans now consider the alliance predatory, particularly under Mr. Trump.
Some conservative U.S. groups have seized on the Coupang episode — alongside the Lee administration’s raids on churches accused of corruption and its desire for dialogue with North Korea — as incompatible with U.S. values, said Seong-Hyon Lee, a Korea expert at the George H.W. Bush Foundation for U.S.-China Relations. So they accuse the government of being “pro-North Korea” and “pro-China,” he said.
“While the Lee administration has made genuine efforts to reinforce the alliance with Washington,” he added, “some critics have continued to interpret Seoul through older ideological lenses.”
