Coupang, South Korea’s e-commerce giant, significantly increased its U.S. lobbying efforts in early 2024, spending over half of last year’s total lobbying funds in the first quarter alone.
The company’s increased focus on lobbying the U.S. government is seen as a response to the government’s introduction of online platform regulations. Unlike the introduction of platform laws in other countries, this move is thought to be linked to ongoing trade issues in S. Korea.
According to OpenSecrets, a nonprofit organization tracking lobbying activities in the U.S., Coupang Inc., the parent company of Coupang, spent $830,000 in the first quarter of this year, which is 58% of the total lobbying funds spent last year ($1.43 million). The number of lobbyists in the company also increased from five last year to nine this year.
Coupang lobbied the White House, the Department of Commerce, and the Office of the United States Trade Representative, among others. The lobbying efforts were reportedly aimed at responding to online platform regulations. Activities also included strengthening international trade and economic cooperation and preventing unfavorable regulations and tariffs.
Despite recording a net loss of $24 million in the first quarter, Coupang concentrated on lobbying to counter the Platform Competition Promotion Act (PCPA), a platform regulation promoted by the Korea Fair Trade Commission (KFTC). The KFTC is expected to introduce strong regulatory measures, including the “pre-designation of dominant platforms.”
The proposed regulation is focused on limiting unfair trade practices by platform companies to protect consumers. It aims to designate a small number of monopolistic platforms as dominant operators and strengthen the regulation of four power-abusing behaviors, including a ban on showing favoritism to sister companies in making deals or issuing orders.
If the PCPA is enacted, Coupang, which has grown into an online e-commerce giant, would inevitably be affected. From Coupang’s perspective, the regulation could be seen as an obstacle to its growth. Additionally, the recent imposition of a 140 billion won ($100.6 million) fine by the KFTC on Coupang for “customer inducement through unfair practices” further emphasizes fair trade-in platforms, adding to Coupang’s burden.
In this context, Coupang’s focus on lobbying in the US is analyzed as an attempt to provoke opposition from the U.S. government and economic circles to South Korea’s platform regulations. The U.S. has reportedly raised concerns regarding the proposed regulations.
The U.S. believes that if companies like Google, Apple, Facebook, and Amazon are sanctioned under the Korean bill, it could impact international trade. Clete Willems, a former Deputy Assistant to the President for International Economics and a potential candidate for Secretary of State under former President Donald Trump’s possible re-election warned in an interview with a media outlet in January that Korea’s platform law could trigger extreme measures, such as invoking Section 301 of the Trade Expansion Act (regulations related to unfair trade).
The KFTC is aware of the trade issues and is reviewing them from multiple angles. At a press conference in May, Han Ki-jeong, the Chairman of KFTC, said, “We will review the platform regulation bill with various alternatives, considering the market environment and trade issues comprehensively, to come up with the most desirable content for our country.”
Previously, the European Union (EU) and Japan also introduced platform regulation laws that designate specific companies in advance. However, it is considered unusual for Coupang to raise issues, as there have been no trade disputes between the KFTC and its counterparts in the EU or Japan over similar matters.
Some view this as a move to avoid designating Kim Beom-seok as the controlling shareholder of the company, in addition to the platform law. If Kim is recognized as the head of the conglomerate, the designation system is a regulation where the government identifies the leader to prevent unfair trade practices, such as using market dominance to favor relatives and disrupt fair competition.
A trade expert stated, “The surge in Coupang’s lobbying funds suggests there’s an urgent matter requiring lobbying efforts. For Coupang Inc., this could be related to the platform law, but more likely, it is also aimed at avoiding the designation of Kim Beom-seok as the controlling shareholder.”
In early May, the KFTC clarified the conditions for designating the controlling shareholder while announcing large corporate groups. During this process, Chairman Kim was not designated as the controlling shareholder of Coupang. Although Chairman Kim effectively controls Coupang Inc., he does not own shares in the domestic corporation, meeting the KFTC’s exceptions, such as “an individual who controls a corporate group does not invest in domestic subsidiaries except for the parent company.”
