“South Korean regulators have consistently targeted Coupang and subjected the company to hostile regulatory treatment, unfair enforcement practices, and disproportionately large penalties not faced by their Korean competitors,” the House Judiciary Committee stated on July 1, 2026, as it released its long-awaited interim report outlining the troubling patterns of discriminatory and targeted enforcement against American technology companies, including U.S.-headquartered marketplace Coupang, by the Republic of Korea’s (RoK) government. The Association for Competitive Technology (ACT), whose members include small app developers, startups, and software companies that depend on transparent, rules-based digital markets to compete fairly, is concerned that the report’s findings are a warning sign. When intelligence services and regulators can be weaponized to settle competitive scores, the smallest players in the ecosystem are the first to lose the protection of the rule of law.
For ACT members, curated online marketplaces (COMs) like Coupang serve functions that are often overlooked by policymakers. They are a digital storefront, a fulfillment network, a payments rail, and often the only realistic path to reaching consumers in a new market. Small and medium-sized businesses (SMBs) are no longer building just for their domestic markets. The moment a developer or small seller gains access to a global COM, they can reduce overhead costs, achieve near-instantaneous global reach, and inherit a level of consumer trust that would take years and capital that most SMBs do not have to build independently. That access is not guaranteed. It depends entirely on the COM being able to operate with stability, legal certainty, and protection from politically motivated interference. We’ve heard this on the ground in our time in Korea last year (check it out here) speaking with Korean startups. The RoK has a successful and growing market for SMBs and startups; however, the regulatory approach undertaken by the RoK has put that all at risk.
What’s Happening to the Platform? Why This Matters for SMBs
Korea’s case against Coupang is not an isolated incident. It is the most visible and well-documented episode in a longer pattern of discriminatory enforcement actions against U.S. technology companies operating in the Korean market, which the Judiciary Committee report makes clear. In fact, according to the report, U.S. officials have been raising concerns over these issues with their Korean government counterparts for more than 20 years. This is a pattern that, according to Demetrios Marantis, former acting U.S. Trade Representative under President Obama, has no modern precedent. “Korea has had a long history of discriminating against foreign companies, just generally, and being protectionist, and a little bit inward looking,” Marantis told CNBC. “But the situation with Coupang — I have never seen anything this intense. This much of a whole-of-government assault on one company.” The Korea Fair Trade Commission (KFTC) has imposed more than two trillion Korean won, approximately $1.33 billion USD, in consumer and competition-related penalties across all sectors of the Korean economy since June 2025. But the burden of that enforcement has not fallen evenly. According to data provided directly to the Korean National Assembly, while several large domestic Korean conglomerates recorded the highest number of antitrust violations between 2022 and the first half of 2025, U.S.-headquartered marketplace operators paid the most in fines during that same period, despite accumulating far fewer overall violations. A National Bureau of Asian Research (NBR) report examining this record found that KFTC enforcement has resulted in disproportionate scrutiny of U.S. firms, raising serious questions about de facto discrimination and the politicization of competition policy, including through unnecessarily aggressive investigative tactics, office raids, and the frequent use of criminal sanctions.
Coupang’s own experience illustrates the compounding nature of this pressure in ways the KFTC fine data alone cannot capture. The company faced multiple investigations from four separate agencies: the Ministry of Employment and Labor, the KFTC, the Financial Supervisory Service, and the National Tax Service. On top of that, as the House Judiciary Committee report showed, when Coupang disclosed the breach to Korean officials, Korea’s National Intelligence Service (NIS) compelled Coupang to retrieve a laptop with the stolen data from a river in Shanghai through a secret Korean-government-run mission, and then denied the whole thing while threatening the company’s U.S. executives with perjury for telling the truth about the incident. That kind of multi-agency pile-on is not a regulatory process; it is a forced obligation. A major U.S. company with a significant legal infrastructure and balance sheet resources has struggled to manage it. SMBs have none of those buffers, and often are the least equipped to handle these types of onerous regulatory obligations. In fact, according to a paper from the Southeast Asian Public Policy Institute last year looking at platform regulations across the Asia Pacific region, SMBs feel the brunt of the compliance and regulatory burdens from these overly broad regulatory assaults. An astonishing 70 percent of the $3.07 billion USD annual compliance burdens, or approximately $2.15 billion USD, would directly fall onto SMBs. For SMBs, the collapse or operational disruption of the COM they depend on is not a line item; it is essentially an entire market gone.
The Korean government has also made its objectives in the Coupang case unusually explicit. President Lee Jae-myung stated publicly that his goal was to “make [people] think that the company is going to go bankrupt.” That is not the language of regulatory oversight. It is the language of a deliberate campaign to destabilize a platform, and every seller, developer, and small business operating through that platform should understand that the threat affects them too.
Washington is Paying Attention
The business conduct issues at issue have already been noticed in the United States. In April 2026, 54 House Republicans sent a formal letter to the RoK Ambassador demanding an end to the discriminatory regulatory actions against American businesses. Now, the committee’s report argues that Korea’s campaign against Coupang directly violates the U.S.-RoK trade agreement negotiated in 2025, under which Seoul committed to ensure that U.S. companies are not discriminated against and do not face unnecessary barriers in digital services. The RoK’s actions have garnered pressure from Congress to get explanations for why these actions are being taken. As the report highlights, the message to American companies is now crystal clear: if this can happen to a major U.S. company like Coupang, which is Korea’s second-largest private employer, no seller, developer, or SMB operating through a COM in Korea can consider their market access secure.
What This Means for Businesses Across Korea and the United States
The House Judiciary Committee’s report is clear on the precedent this sets: “The RoK’s conduct is part of a broader attempt by foreign governments to weaponize their laws and regulations in an effort to harm American companies and limit their ability to compete in the global economy.” The SMB community feels the effects directly.
A small developer or app company has a channel, and they have a product. When that channel is put under deliberate political pressure, those businesses have no fallback. The uncertainty that Coupang’s sellers, including from the U.S. and Korea, now face in managing their Korean market channel is precisely the uncertainty that every potential market participant will weigh when deciding whether to build for the Korean digital economy at all. That ripple effect won’t just stay siloed in RoK but will affect the entire market in the region.