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The 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.
This is really about the relationship between two key allies.
Chris Stewart
Former GOP congressman from Utah and president of lobbying firm Skyline Capitol, which has consulted for Coupang
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.
Pressure from Coupang shareholdersBut 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."
U.S.-South Korea trade pact stallsSouth Korea is the seventh-largest U.S. trading partner, according to the U.S. Census Bureau in June. In 2025, the two countries renegotiated a trade deal as part of Trump's sweeping global tariffs. A key aspect of that deal was a lower tariff rate for South Korea in exchange for a $350 billion investment in U.S. shipbuilding and national security, as well as reducing regulation of U.S. companies.
But South Korea has been slow to finalize projects related to the $350 billion pledged as part of the trade deal, causing friction and threats of tariffs earlier this year from Trump.
In July, Trump imposed new import duties on South Korea and dozens of other countries, citing forced labor violations.
Secretary of State Marco Rubio spoke about the complexities of the U.S.-South Korea relationship during an appearance before the House Foreign Affairs Committee in June. The alleged hostility of South Korea toward Coupang and others has "impacted our ability to conclude a trade agreement with them because of some of their behavior towards American companies," Rubio said.
A covert missionThe U.S. report laid out what Republican investigators said were South Korea's actions involving Coupang since the data breach was disclosed in November, leading to the resignation of the company's CEO, Park Dae-jun, the following month. He apologized in a public statement for the breach, saying he felt "a deep sense of responsibility for the outbreak."
Congressional investigators described what they said were excessive fines, harassment and threats of criminal charges directed by the South Korean government at Coupang. They detail a response to the data breach from the country's authorities that sounds at points like something out of a spy novel.
According to the report, the South Korean government compelled Coupang to hire divers for a covert mission to retrieve a laptop used in the breach by a disgruntled former employee — who is a Chinese national — from a river in Shanghai.
The report outlines the involvement of the Korean National Intelligence Service, or NIS, leading up to the recovery of the computer. Additional documents in the committee's possession — which were obtained by CNBC — include contemporaneous notes from a Coupang representative's phone that describe NIS representatives instructing the company to hire a diver and extract the computer from the river in December.
An internal company memo from around the time of the recovery mission — also obtained by CNBC — indicates Coupang coordinated the computer recovery at the behest of a high-ranking national security officer from the South Korean president's office. Call logs from before, during and after the retrieval show more than 200 calls between South Korean officials and representatives of Coupang, the committee reported.
The South Korean government has denied the report's findings. In a statement to CNBC, the spokesperson for the South Korean embassy said allegations that the government helped coordinate the retrieval are "entirely unfounded."
"The National Intelligence Service (NIS) conducted only working-level consultations with Coupang necessary to facilitate information sharing and prevent further harm in connection with the large-scale personal data breach. At no point did the NIS coerce or instruct Coupang to take any particular action," the spokesperson said.
In late July, after the congressional report was issued, the South Korean government submitted a rebuttal to the committee which the embassy also provided to CNBC.
The rebuttal says the data breach affected 37.55 million people, while the congressional report counters that the "former employee only stored and retained information related to approximately 3,000 accounts." The difference stems from the amount of data that was exposed versus what was retained.
Seoul, in its response, also downplayed the 625 billion won, or $409 million, fine the government levied on Coupang in June for the breach and for allegedly illegally collecting personal information. The New York Times reported that the fine was the largest data-privacy penalty imposed on a company by South Korea. But in its rebuttal, South Korea noted the fine fell far short of the 3% of a company's revenue it could have charged under the country's laws. Coupang reported 2025 revenue of $34.5 billion.
'A shame and a surprise'South Korea's response to the committee report hasn't sat well with Washington Republicans. One person familiar with the thinking of lawmakers on the House Judiciary, Foreign Affairs and Armed Services committees, who asked not to be named in order to speak candidly, emphasized the importance of the relationship between the U.S. and South Korea and called the episode "a shame and a surprise."
The person said Congress was considering all tools at its disposal, including sanctions.
"This report is too comprehensive and too full of facts to be rejected. Calling us liars will set us back even further," the person said, referring to U.S.-South Korea relations.
A former senior Trump White House official said "no one in Congress or the White House can understand why the South Korean government continues to lie about its attacks on U.S. companies, especially Coupang. This behavior is seriously undermining Korea's credibility in the U.S., and it looks performative to benefit their relationship with China." The official asked not to be named in order to speak candidly.
The South Korean embassy spokesperson called the suggestion "entirely unfounded."
However, the reaction on Capitol Hill — where Coupang has mounted an extensive lobbying effort — has not been universal outrage.
One Capitol Hill Democrat familiar with the Judiciary probe, who asked not to be named in order to speak candidly, questioned the GOP's intense focus on Coupang, given the company's limited footprint in the U.S., and pointed to the company's ties to the Trump White House.
Coupang donated $1 million to Trump's inaugural fund in 2024, putting it on par with Google, Meta and Nvidia. Kevin Warsh, now chairman of the Federal Reserve, was a Coupang board member from 2019 until earlier this year. And Rob Porter, its chief global affairs officer, was White House staff secretary in the first Trump administration.
But Coupang's corporate political action committee has frequently donated to candidates from both parties. And other Democrats, especially those from Coupang's home state, Washington, have joined their Republican colleagues in denouncing South Korea's posture toward the company.
Rep. Suzan DelBene, who represents part of the Seattle metropolitan area, said at a Ways and Means Committee hearing in January that she'd heard from Coupang and others that South Korea was violating the antidiscrimination commitments in the 2025 trade agreement.
And Sen. Maria Cantwell, also a Washington Democrat, sent a letter in February to South Korea's ambassador in Washington expressing her "grave concern" over the country's treatment of Coupang.
Undermining an allianceCoupang is not the first American company to complain of targeting by South Korean regulators. Other U.S.-based digital companies such as Google and Netflix have at times found themselves crosswise with the South Korean government.
Still, Coupang's supporters say they've never seen South Korea go after a company with the intensity with which it has pursued Coupang.
Baumgartner, who in late July introduced a bill that would give Congress the power to deem individual foreign officials subject to deportation or denial of entry if they engage in "economic discrimination" against the U.S., called South Korea's response "farcical" and "dismissive."
"Whatever happened with the data breach, none of it merited this over-the-top, punitive response," he said.
— Kevin Breuninger and Luke Fountain contributed to this report.