China blocks Meta from acquiring AI startup Manus

[AP Photo]

China yesterday blocked U.S. tech giant Meta’s acquisition of the artificial intelligence startup Manus, in an unexpected move to reverse a deal that apparently aroused Beijing’s concerns about the transfer of advanced technology.

In a one-line statement, China’s National Development and Reform Commission, the country’s top planning agency, said it was prohibiting a foreign acquisition of Manus and had required all the parties to withdraw from the deal. It did not specifically name Meta Platforms, which owns Facebook and Instagram.

The decision was made by the commission’s Office of the Working Mechanism for Security Review of Foreign Investment in accordance with Chinese laws and regulations, the statement said. It came after Chinese authorities said they were looking into the deal earlier this year.

The commission did not elaborate on the reasons for the ban.

The announcement came less than a month before U.S. President Donald Trump’s planned visit to Beijing to meet Chinese leader Xi Jinping in May, in a sign that China’s communist leaders are tightening scrutiny of the AI industry amid intensifying geopolitical rivalry with the U.S. over the technology.

Meta announced in December that it was acquiring Manus, which has Chinese roots but is based in Singapore, in a rare case of a major U.S. tech group buying an AI company with strong links to China. Its deal with Manus, whose “general-purpose” AI agent can perform multistep complex work autonomously, was expected to help expand AI offerings across Meta’s platforms.

Meta had said there would be “no continuing Chinese ownership interests in Manus” and that Manus would discontinue its services and operations in China. But China said in January that it would investigate whether the acquisition would be consistent with its laws and regulations.

China’s commerce ministry said at the time that any enterprises engaging in outward investment, technology exports, data transfers and cross-border acquisitions must comply with Chinese law.

Meta had said most of Manus’ employees were based in Singapore.

Manus did not respond to a request for comment. Its website says the company “is now part of Meta,” indicating that the deal had already been completed.

Meta said yesterday that the Manus transaction “complied fully with applicable law.”

“We anticipate an appropriate resolution to the inquiry,” the California-based company said in a statement.

Singapore-based Butterfly Effect Pte was the firm behind Manus ahead of the acquisition. But the AI startup traces its roots back to Beijing-registered entities which were established several years ago.

“China is showing the world that it is willing to play hardball when it comes to AI talents and capabilities, which the country views as a core national security asset,” said Lian Jye Su, chief analyst at the technology research and advisory group Omdia. “It is strongly indicative of what Chinese authorities may do going forward regarding acquisitions involving Chinese deep-tech companies.”

Beijing’s acquisition ban could deter similar acquisition plans by U.S. tech giants going forward, he said. “In the context of rivalry, it mirrors U.S. export controls, entity lists, and investment curbs on China,” said Su. MDT/AP