The South Korean government has not been friendly to American businesses – specifically in the technology space. While the United States has a trade deficit with most nations, if you only analyze the service industry, dominated by tech service exports, there is more than a $300 billion trade surplus. Not a coincidence that many nations have created protectionism against American tech service imports.
Recently, a number of US investors decided to pursue litigation against the South Korean government for losses due to attacks on American business – joining the ranks of Altimeter Capital and Greenoaks Capital. This represents more than just a shareholder dispute – it’s a critical test of whether foreign governments can weaponize regulatory processes to expropriate value from US investors while facing no consequences. It’s also a bellwether for how investors are increasingly viewing Korea: closed for business.
At the center of this escalation is U.S. tech company Coupang, which serves tens of millions of Korean customers and competes with Korean conglomerates across e-commerce, food delivery, and more. The Korean government has long been known for its desire to heavily regulate U.S. companies to give Korean companies an advantage. But when Coupang suffered a data breach in Korea late last year, President Lee and his administration saw an opportunity to – as he put it – “bankrupt” Coupang. The stock price has since lost nearly 30% of its value.
This follows an increasingly familiar pattern from South Korea’s Fair Trade Commission. Seoul has systematically targeted American technology firms with investigations, fines, and forced restructurings that bear the unmistakable hallmarks of economic nationalism rather than consumer protection. Google, Apple, and Meta have all faced regulatory actions in Korea that somehow always conclude with the ultimate benefit flowing to Korean competitors.
For too long, American capital has operated under an unspoken agreement in foreign markets: accept local regulatory risk as the cost of doing business, write down the losses, and move on. This arrangement worked when regulatory actions were good-faith market oversight. It breaks down completely when governments discover they can systematically transfer wealth from foreign investors to domestic champions with no accountability.
Coupang was the earliest entry point for foreign investment into Korea for many U.S. investors, including Greenoaks, Blackrock, Stan Druckenmiller, and more. For more than a decade, Coupang drew in billions of foreign capital, operated at a loss, and took on risk that few would.
Now, Coupang is the second-largest employer in Korea, with nearly 100,000 employees, and has created tens of billions of dollars in shareholder equity. The company has invested billions into the Korean economy. That success has resulted in those same investors funding dozens of other Korean startups which have become highly valuable private companies, including Toss, a popular South Korean app that provides banking and other financial services, and travel platform Yanolija.
For Coupang, it recently broke even and began to generate profits after operating at a loss for years. Now, because the Korean government decided to wage war on Coupang due to its U.S. roots, billions have been destroyed over a matter of weeks. Unless this action stops, billions more will follow.
Global investors and economists are already indicating that Korea is becoming a place for American investors to avoid. A recent study by the Competere Foundation found that the US and Korean economies stand to lose roughly $1 trillion over the next 10 years if this continues.
Some investors have told Korean management teams that U.S. investor sentiment has weakened materially, and that a Toss IPO valuation would likely be half of what it was before recent events. Others are beginning to question whether companies like semiconductor vendor SK Hynix could face nationalization risk.
What Greenoaks identified early-on is that allowing this pattern to continue unchallenged doesn't just harm investors – it undermines the entire architecture of international investment. If Seoul can engineer regulatory pretexts to expropriate value from American shareholders, every other government will take note, and so will technology investors, who have many alternative investment options that present much less risk.
Coupang’s case emerges at a moment when the U.S. is fundamentally reassessing its economic relationships. The Trump administration has made clear that economic security is national security, and that reciprocity – not unilateral American accommodation – must govern international commerce.
South Korea has been a beneficiary of American military protection, market access, and capital for decades. Yet Seoul’s regulatory authorities increasingly treat American companies not as valued partners but as targets of opportunity – sources of technology transfer, revenue extraction, and competitive advantage for Korean champions.
In an era when economic competition defines geopolitical standing, the U.S. cannot afford to let its capital become a subsidy for foreign industrial policy. This also is a lesson that protectionism by one nation leads to more protectionism by other nations and less economic commerce between nations.
