As trade tensions between the United States and South Korea persist, American companies operating in the East Asian country are expected to continue bearing the brunt of the fallout from the Trump administration’s immigration raid at a Hyundai plant in Georgia last month.
The raid resulted in the detention of more than 300 Korean nationals, who were eventually returned to their native country. In response, the Korean government said it was investigating whether human rights abuses were committed during the Hyundai raid. Yet, American companies have been subjected to harassment by Korean authorities for years.
The Korea Fair Trade Commission, the country’s antitrust regulator, frequently conducts surprise raids at offices owned by U.S. tech firms in Seoul and levies significant fines over allegations of unfair business practices.
As an administrative body, the KFTC does not need court-issued search warrants such as those reserved for criminal matters. However, KFTC investigators must obtain consent before inspecting a business. Theoretically, an executive could bar their entry, but in reality, taking a stand would likely invite further harassment from the antitrust regulator.
One of the commonly targeted firms is Coupang, a U.S. tech company and online retailer primarily operating in South Korea. It was fined $98 million last year for allegedly using deceptive algorithm-based practices, which are common in retail.
In 2023, the KFTC fined Google $29.4 million for blocking the release of mobile video games on a competitor’s platform. Two years before, Google was fined $177 million for allegedly blocking customized versions of its Android operating system.
Apple was also hit with a fine in 2021, although the amount was considerably less than Google’s $177 million sanction. The iPhone maker was fined $264,000 based on allegations that it obstructed KFTC raids.
The National Bureau of Asian Research cites Coupang, Google, Apple, and others as examples of U.S. firms that are frequently targeted in these investigations, more so than Korean or Chinese firms.
“While the KFTC also investigates South Korean firms (like Naver and Kakao), U.S. firms have consistently been the target of major enforcement action,” Nigel Cory and Robert Holleyman wrote in a policy brief for the think tank. “Meanwhile, the KFTC exempts smaller firms and, in effect, Chinese rivals.”
One foreign relations expert argued that while Chinese firms may benefit from a lack of regulatory oversight, it’s not because the KFTC aims to actively support China.
“U.S. firms are the ones that are choosing not to invest or to pull out [of South Korea], while Chinese companies either find ways to manage the KFTC’s actions or are not affected because the Chinese companies that are investing are smaller and thus more under the radar,” Henry Haggard, former minister counselor for political affairs at the U.S. Embassy in Seoul, told the Washington Examiner.
While he doesn’t believe the KFTC is carrying out a specific anti-American agenda in its hostile approach to U.S. firms, Haggard said it is unintentionally stalling U.S. investments in South Korea.
South Korean President Lee Jae-Myung warned that the same chilling effect could happen to Korean companies’ investments in the U.S., but attributed the cause to the Hyundai raid, the fallout of which continues to play out as trade talks between the two nations develop.
“The ICE raid has changed the political calculus for the Lee government,” Haggard said.
“Until the raid, [Lee] had successfully countered those members of his party and cabinet who hoped for a different deal, a more sovereignist approach and a harder negotiating line,” he added. “With the raid, he no longer has a free hand and has to negotiate more within his own party, publicly and privately, and this will make the negotiations more intense and potentially more confrontational.”
The trade deal was signed in July but has not yet been finalized. Negotiations may come to a close sometime this month ahead of the Asia-Pacific Economic Cooperation Summit in South Korea. President Donald Trump is reportedly planning to hold a bilateral meeting with Lee ahead of the two-day summit from Oct. 31 to Nov. 1, although his schedule is subject to change.
Haggard suspects the final agreement may look like the one between the U.S. and Japan. As part of the deal, Trump moved to implement 15% baseline tariffs on most Japanese imports, down from the proposed 25% rate, and Japan agreed to invest $550 billion in the U.S.
In the meantime, the U.S.-South Korea trade deal is beset by nontariff barriers. These obstacles are not only KFTC enforcement actions but also Korean tech regulations that disproportionately affect U.S. firms.
The Korean government is currently advancing the Online Platform Fairness Act, which the Information Technology and Innovation Foundation describes as “discriminatory” in the bill’s differing treatment between domestic and foreign companies. A similar bill, called the Online Platform Monopoly Act, was modeled after the European Union’s Digital Markets Act and thus more overt in its antimonopolization purpose.
Legislative movement on the Monopoly Act halted after the Trump administration and Congress raised concerns about the bill targeting U.S. tech firms, but the ITIF argued South Korea is still proceeding with the discriminatory legislation in the form of the Fairness Act.
“This looks like a classic bait and switch. Korea proposed two discriminatory bills, then paused the obvious one after U.S. pushback while quietly advancing the other,” Lilla Nora Kiss and Hilal Aka wrote in July. “United States officials should not be hoodwinked: If a country proposes an extreme measure, then replaces it with an equally harmful policy while calling it a compromise, that’s not moderation. The Fairness Act is the same attack in different packaging.”
Korean officials maintain the bill is necessary to combat large corporations’ abuse of market dominance and superior bargaining positions over small businesses.
Underlying South Korea’s push to regulate large online platforms is the politics of it all. Lee assumed office in June as the head of the country’s liberal Democratic Party, wresting control from the conservative People Power Party. The latter party faced a crisis late last year when former President Yoon Suk Yeol declared martial law, a decision that ultimately led to his impeachment and removal from office.
KEMP TRAVELING TO SOUTH KOREA AFTER HYUNDAI IMMIGRATION RAID
With Lee in power, South Korea is expected to strengthen corporate regulations in line with the ruling party’s progressive policies.
The man assisting Lee in that mission is KFTC Chairman Joo Byung-ki, who began his three-year term on Sept. 15. Joo has been outspoken in his calls for harsher penalties for corporations, indicating that the KFTC will only intensify its antitrust investigations of U.S. firms.