The author is a Reuters Breakingviews columnist. The opinions expressed are her own.

By Robyn Mak

HONG KONG, Jan 26 (Reuters Breakingviews) - Silicon Valley's venture capitalists are taking a page out of President Donald Trump's playbook. Greenoaks Capital Partners and Altimeter Capital Management are asking the U.S. government to punish Seoul for what they say is unfair and discriminatory treatment of the $37 billion New York-listed Coupang CPNG.N following a data breach. It's a brazenly opportunistic test of bilateral ties, and if successful, might embolden others to capitalise on Washington's growing spread of diplomatic tensions.

The investors, who own roughly $1.5 billion worth of shares in South Korea's biggest online retailer, revealed last week they have petitioned the U.S. Trade Representative to initiate a so-called Section 301 investigation on unfair trade practices against the government in Seoul. It's a powerful tool Washington has deployed against China to impose tariffs. Current Section 301 investigations include probes into shipbuilding and semiconductor industries in the world's second-largest economy, plus on whether Beijing fulfilled its commitments to the U.S. under a 2020 trade agreement.

That Greenoaks and Altimeter are trying to invoke this on a U.S. ally is a dramatic twist in a corporate saga. In November, Coupang disclosed a cybersecurity breach that compromised data of more than 33 million customer accounts in Korea, where it makes most of its revenue. Though the U.S.-headquartered company later said that data from only 3,000 accounts was directly impacted, Greenoaks and Altimeter allege that President Lee Jae Myung's administration has kicked off a "whole-of-government" effort to cripple Coupang's business, including labor, financial and customs investigations. In addition, the U.S. investors plan to file international arbitration claims against Seoul.

Positioning Coupang as an American company being singled out seems shaky: Seoul's heavy-hand across Korea Inc is well documented. U.S. Vice President JD Vance has nonetheless waded in, expressing hope that the Coupang situation can be resolved fairly. It ups the political pressure on Lee's administration which is caught in the crossfire between Beijing and Washington. In January, the Korean leader visited Beijing, snapping selfies with his Chinese counterpart Xi Jinping, just months after agreeing a trade deal with Washington that promises $350 billion of investments into the United States. Notably, Greenoaks and Altimeter called out Lee's "increasingly anti-U.S., pro-China stance". The U.S. Trade Representative now has just over a month to decide whether to open an investigation, making any de-escalation between Coupang and Seoul in the interim tricky.

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CONTEXT NEWS

U.S. venture capital funds Greenoaks and Altimeter on January 22 said they have petitioned the U.S. Trade Representative to investigate the South Korean government's "unreasonable and discriminatory conduct" against Coupang and impose "appropriate trade remedies". The e-commerce company is U.S.-listed and headquartered.

The funds, owners of about $1.5 billion of Coupang stock, also served formal notice of their intent to file arbitration claims against the South Korean government under the U.S.-Korea Free Trade Agreement, which protects U.S. investors and companies against discriminatory acts and unfair trade practices.

Coupang's U.S. stock has fallen about 25% since November when the company announced a data breach in which personal data for some 33 million accounts in South Korea were compromised. The company subsequently said that "the perpetrator only saved limited data from approximately 3,000 customer accounts, and such customer data has been deleted without having been shared with a third party."

(Editing by Una Galani; Production by Aditya Srivastav)

((For previous columns by the author, Reuters customers can click on MAK/ robyn.mak@thomsonreuters.com))