Two U.S. investment firms that invested in Coupang submitted a letter of intent on the 22nd (local time) to initiate investor-state dispute settlement (ISDS) arbitration proceedings against the Korean government. ISDS can be filed by corporations that suffered losses due to actions by a specific government, and the firms that invested in Coupang argued in the letter that "the Korean government discriminated against Coupang in favor of its Korean competitor Naver." The investment firms also filed a petition requesting an investigation by the Office of the United States Trade Representative (USTR).
According to a compilation of reporting by ChosunBiz that day, Greenoaks and Altimeter, investment firms holding equity in U.S.-based Coupang Inc, Coupang's parent company, claimed in their ISDS notice of arbitration sent to the Korean government that "the Korean government is using a pretext of personal data leakage to eliminate the ability of a successful American corporation (Coupang) to compete with the Korean and Chinese corporations it favors."
The investment firms cited Naver as Coupang's competitor that the Korean government seeks to benefit. They said, "The Korea Fair Trade Commission (FTC) imposed the retail industry's largest penalty surcharge on Coupang and filed a criminal complaint on allegations that it adjusted search algorithms to promote products, but for Naver, which faced similar allegations, it imposed only a penalty surcharge and did not file a criminal complaint."
The investment firms also pointed out that President Lee Jae-myung appointed former Naver figures to senior government posts after taking office. They said, "President Lee appointed figures with significant ties to Coupang's competitor to public office," adding, "Han Seong-sook, Minister of the Ministry of SMEs and Startups, Chae Hwi-young, Minister of the Ministry of Culture, Sports and Tourism, and Ha Jung-woo, the presidential office's AI senior secretary, are such cases."
Along with this, the investment firms characterized President Lee Jae-myung and the ruling Democratic Party as pro-China and anti-U.S. They then said the government's measures to determine the facts of Coupang's data breach "weaponized administrative power after it became clear that (Coupang) threatened the long-held market dominance of Korean and Chinese competitors."
Meanwhile, the investment firms called the Korean government's fact-finding investigation into Coupang's data breach "illegal actions." They added, "This extinguished billions of dollars in U.S. investment in Coupang," and said, "We have the right to claim compensation for Korea's continued violations of the (Korea-U.S. FTA) treaty and international law, current losses are at least hundreds of millions of dollars, and losses to U.S. investors will reach tens of billions of dollars."