Congress Flags Korea’s Discriminatory Digital Policies
Earlier this week, fifty members of Congress sent a letter to Korea's Ambassador demanding that Seoul end its targeted policy attacks on American companies operating in Korea. They argued that Korea's discriminatory treatment of U.S. firms threatens not just bilateral trade, but the alliance itself.
Korea remains one of the most persistent sources of digital trade friction for the United States. Despite Korea's status as a close ally and free trade partner, the recently released National Trade Estimate Report by the United States Trade Representative (USTR), which catalogs trade barriers to U.S. exporters, makes one thing clear: the list of Korean measures harming American technology firms is not shrinking but expanding.
Korea frames each new regulation as a domestic measure addressing local concerns, yet those measures fall disproportionately on American technology firms — restricting market access and handing a competitive edge to China.
Seoul's conduct over the past year has only sharpened those concerns. In November 2025, Washington and Seoul issued a joint fact sheet in which Korea pledged to avoid discriminatory or unnecessary barriers to U.S. digital services. Yet, within weeks, the National Assembly began moving the Online Platform Fairness Act — a sweeping bill that would impose ex ante obligations and fines of up to ten percent of global sales revenue on a narrow set of platforms, most of them American.
Regulatory unpredictability is only one problem. Selective enforcement is another, and Korea's response to the Coupang data breach illustrates it most clearly. The breach compromised user data on a scale comparable to incidents that drew only moderate penalties for Korean domestic firms. Korea's reaction looked nothing like that. Regulators launched raids at Coupang headquarters, threatened to revoke its operating license, and opened retroactive tax audits.
Coupang is not alone. The Korea Fair Trade Commission previously imposed record antitrust penalties on Google, Apple, and Meta. The Coupang episode fits less like an outlier than like the latest entry in a pattern of discriminatory treatment, raising sharp questions about Seoul's promise of even-handed enforcement.
U.S. technology leadership anchors American national competitiveness and security. When an ally's regulatory system repeatedly constrains leading U.S. firms, the costs compound. Every dollar a U.S. cloud provider spends duplicating data centers inside Korea to satisfy localization mandates is a dollar it does not invest in frontier innovation. Every product line an American network-equipment firm redesigns around Korea-specific encryption requirements is capital diverted from frontier innovation — capital that would otherwise strengthen America's edge in a decisive era of strategic competition with China.
As Korean regulations push U.S. firms to retrench, Chinese alternatives fill the space. Beijing gains data flows, network infrastructure, and platform influence — each a foothold that reinforces the Chinese model of digital governance and narrows the competitive gap with the United States. As such, USTR and the administration should engage on the Online Platform Fairness Act through proactive bilateral diplomacy, making clear that discriminatory regulation carries consequences for the broader relationship.
Washington must also enforce what Seoul has already signed. The November 2025 joint fact sheet, the U.S.-Korea Free Trade Agreement, and the Korea Strategic Trade and Investment Deal all contain explicit non-discrimination commitments. Washington should treat those commitments as binding, demand transparent enforcement, and make adherence a condition of any successor framework.
This is all verging on tragic, given the critical importance of close cooperation between Korea and America on technology and industry policy to counter China’s aggressive and predatory technology and industry policy actions. We should be arm in arm, not arm’s length. The ball is in Korea’s court.
