[비즈한국] Government pressure on the giant of the South Korean e-commerce market, 'Coupang,' is intensifying. The Personal Information Protection Commission (PIPC) has imposed a fine of 624.6 billion won on Coupang for leaking the personal data of over 30 million members. This is the largest fine ever, five times greater than the SK Telecom017670 USIM data leak case (134.8 billion won).
Coupang immediately hinted at filing a lawsuit, stating, "We will take legal action." However, the legal community views this as the "beginning of the government's crackdown on Coupang." This is because further investigations and probes by the Korea Fair Trade Commission (KFTC), the police, and the National Tax Service (NTS) are already scheduled.
The core issue of the administrative lawsuit is the 'appropriateness of the fine'
The PIPC imposed a fine of 624.681 billion won on Coupang for the leak of personal data belonging to over 30 million people, and also fined Coupang Fulfillment Services 248 million won for registering 71 police beat reporters on an employment restriction list on the grounds of "spreading false information."
This comes seven months after the Coupang personal data leak occurred last November. Although lower than initial observations that the fine could reach 1 trillion won, it is a record-breaking scale, five times that of the previous largest fine for the SK Telecom USIM data leak (134.8 billion won).
Coupang stated, "It is regrettable that the explanation of the facts was not sufficiently reflected," adding, "We look forward to having this clarified through legal proceedings." By signaling an administrative lawsuit, the company has sparked mixed views in the legal community, as courts have recently applied stricter standards to "fines related to personal information."
Kakao035720 filed a lawsuit against a 15.1 billion won fine regarding a data leak of open chat users but lost the first trial. Kakao Pay, which was fined 5.9 billion won for transferring customer data to China's Alipay without consent, also filed a lawsuit but lost in the first trial. Global companies like Meta have also contested the PIPC's fines in court but lost. However, since the fine imposed on Coupang is 4.6 times larger than the previous record, disputes over the "proportionality of the scale" are expected.
A legal expert with experience at the KFTC noted, "Ultimately, the dispute will center on whether the fine is appropriate relative to the scale of damage determined by the KFTC. Since there is room for debate over whether the information exposed is more sensitive than that of SK Telecom, Coupang likely feels it is worth challenging."
KFTC, police, and NTS also under investigation
The problem is that Coupang faces a mountain of remaining investigations and probes. The KFTC, police, and NTS seem to be targeting Coupang in a coordinated manner.
Currently, the KFTC is investigating allegations of bundling Coupang Eats and Coupang Play with the Coupang Wow membership. A decision on whether to impose disciplinary actions and the level of such measures is expected as early as July or August. The Seoul Regional Tax Office's Investigation Bureau 4—often referred to as the NTS's 'special force'—is currently conducting an unscheduled (special) tax audit, following the audit of the logistics subsidiary Coupang Fulfillment Services last year and an on-site visit to Coupang headquarters last month. The investigation is aimed at uncovering potential tax evasion through unfair internal transactions between affiliates and the processing of phantom expenses.
Furthermore, the police have formed a dedicated task force (TF) of 86 members since January to investigate the circumstances of the data leak, allegations of evidence destruction and fabrication by executives, and claims of perjury by former/current executives, as well as the company's alleged concealment of overwork deaths.
Currently, former Coupang CEO Park Dae-jun and CEO Harold Rogers have been reported for perjury before the National Assembly. Kim Bom-suk, Chairman of Coupang Inc. (Coupang's US entity), his brother Vice President Kim Yu-seok, and former Coupang CEO Kang Han-seung, who failed to attend National Assembly hearings, have also been reported for violating the Act on Testimony and Appraisal before the National Assembly.
Legal experts suggest that this stems from Coupang's "initial response" attitude. During the data leak incident, Coupang responded aggressively to pressure from the government and the ruling party (Democratic Party). This, analysts say, is why the pressure on Coupang has expanded to the KFTC, the NTS, and the police. A partner at a major law firm assessed, "Administrative litigation takes at least 3 to 5 years until a final Supreme Court ruling. It seems Coupang has chosen a strategy of dragging things out and contesting everything they find unfair rather than resolving the matter immediately. They seem to be employing a 'delaying tactic' while waiting for the current administration's investigation pressure to subside."
Ultimately, observations suggest that the standoff between Coupang and the government will prove most profitable for large law firms. A representative attorney at a major law firm explained, "From the personal information fines and future KFTC fines to police TF response and the Investigation Bureau 4 tax audit representation, the legal tasks Coupang must resolve are worth at least several billion won. Considering retainer fees, time charges, and success fees for each court level from the first to the third trial, the total legal costs could reach tens of billions of won. With the advisory market for large corporations already shrinking due to the economic downturn, Coupang's multidimensional legal risks have become a must-win case for law firms."