Tensions are rising over the severity of potential sanctions after the Fair Trade Commission (FTC) publicly mentioned the possibility of suspending Coupang's (CPNG) operations in connection with its personal data breach.
However, analysts say the suspension threat is closer to a "strong warning," given that such measures are unprecedented for major platforms and face stringent legal requirements and procedures. Concerns are also being raised that any punishment must be precisely calibrated to be enforceable, as a Coupang shutdown could send shockwaves through sellers, workers, and consumers alike.
According to retail industry sources on Wednesday, the government is ramping up pressure on Coupang over the extent of damage recovery and implementation of measures to prevent recurrence. FTC Chairman Joo Byung-ki said on Monday that "we must demand damage recovery measures from Coupang through consultation with relevant ministries," adding that "if Coupang fails to implement these appropriately, we can impose a business suspension order."
While he attached the caveat that authorities must first confirm whether consumer information was misused and whether financial damages occurred, the government has effectively put the nuclear option of suspension on the table.
The legal basis cited by the FTC is the Act on Consumer Protection in Electronic Commerce (E-Commerce Act) under its jurisdiction. The law is designed to first order cessation of violations, corrective measures, and steps necessary to prevent recurrence. Business suspension can only be ordered for a specified period when these orders are not complied with or when violations are so serious that corrective measures alone cannot prevent consumer harm.
This means corrective and improvement orders must be issued first based on investigation results, followed by compliance verification procedures. The FTC plans to determine the level of sanctions by comprehensively considering the results of the joint public-private investigation, the scale of damages, and the level of compliance with damage recovery measures. Sanctions by the Personal Information Protection Commission will proceed separately.
However, the FTC faces high hurdles before actually playing the suspension card. While this incident originated from a personal data breach, business suspension under the E-Commerce Act is fundamentally a sanction linked to "consumer harm," particularly "financial damages."
Therefore, key issues for determining suspension include whether consumer information was actually misused resulting in financial damages (or significant risk thereof), and whether the company properly implemented the damage recovery and recurrence prevention measures demanded by authorities. Given the structure of phased sanctions—correction, compliance verification, then escalation—suspension is considered a "last resort."
Another key factor surrounding sanctions is the paradox that "shutting down the platform could actually amplify the damage." The E-Commerce Act stipulates that if a business suspension would cause "severe inconvenience" to consumers or harm public interest, fines can be imposed instead.
Observers say that if the full shutdown of a platform as large as Coupang could shake everyday transactions including delivery, refunds, and settlements, thereby expanding consumer harm, the actual outcome will likely be a "combination of sanctions" including corrective orders and fines.
The massive ripple effects of an actual suspension are also fueling debate. If Coupang's logistics and delivery operations plummet, both employment and transactions could be simultaneously disrupted. As of October, Coupang's directly employed workforce totaled 93,065 based on National Pension Service workplace enrollment data. Including delivery drivers and partner company personnel, estimates suggest the Coupang ecosystem employs more than 400,000 people.
Coupang has stated that as of 2023, it transacts with 230,000 small business partners with annual transaction value of approximately 12 trillion won ($8.8 billion). Industry watchers point out that if the platform suddenly stops, confusion would spread across all operations including settlements, inventory, and advertising, with sellers heavily dependent on Coupang facing potentially fatal short-term revenue gaps.
Experts believe the realistic approach is to issue detailed corrective and improvement orders combined with fines rather than suspension. Chairman Joo himself hinted at the possibility of not implementing suspension, noting that "if business suspension could harm consumers, fines can be imposed instead."
Suh Yong-gu, a business administration professor at Sookmyung Women's University, said, "A business suspension is like completely blocking access to a highway because of an accident," adding that "a combination of effective measures such as fines and security improvement orders should take priority." The key is to make violators pay the cost of illegal conduct while specifying recurrence prevention obligations and connecting them to compliance verification, he explained.
Concerns are also emerging that excessive suspension could set a "bad precedent." Lee Jong-woo, a business administration professor at Ajou University, emphasized that "suspension can appear emotional, and if it becomes an excessive punishment outside legal bounds, it could set a precedent across the entire industry," adding that "the message it sends to foreign investors and global companies must also be considered."
Ultimately, the key is striking a balance between "strong punishment" and "realistic enforcement." Voices are growing that sanctions must be precisely designed to force damage recovery and recurrence prevention measures to actually work, while ensuring a platform shutdown does not deliver secondary shocks to workers, sellers, and consumers.