Topline
The Chinese Government on Monday blocked Meta’s $2 billion deal to acquire the Chinese-founded artificial intelligence startup Manus, a regulatory maneuver that comes amid an escalating fight between Washington and Beijing over advanced AI technologies.
Chinese authorities blocked Meta’s $2 billion deal to acquire Manus.
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Key Facts
According to China’s official Xinhua News Agency, the country’s National Development and Reform Commission (NDRC) foreign investment review arm has issued a decision to block the sale of Manus.
The agency said it has also issued an order to all parties involved to unwind the acquisition.
Manus launched as an AI agent, which is designed to autonomously carry out complex tasks, such as writing research reports, preparing presentation slides and building websites, last year in March.
The launch was hailed by Chinese state media as the country’s latest breakout AI product, following the launch of Deepseek’s AI model, which shook up major U.S. tech stocks.
Meta, which announced the acquisition in late December, has not commented on the Chinese government’s order yet.
What Do We Know About Manus’ Parent Company?
According to the Wall Street Journal, early versions of Manus were developed by the Chinese startup Beijing Butterfly Effect Technology, founded in 2022. After its launch last year, the AI startup relocated its top engineers and headquarters from Beijing to Singapore, joining several other Chinese firms in doing so. Moving to Singapore allows many Chinese AI startups to circumvent U.S.-China geopolitical tensions and gain access to Western AI models and investors. According to the Financial Times, Manus’ move to Singapore had initially been cleared by the NDRC, however, Meta and the startup did not inform Chinese authorities before inking the deal in December.
How Did Beijing React To The Meta-Manus Deal?
In January, just days after Meta and Manus announced the deal, Chinese officials began investigating the acquisition for potential national security issues and export control violations. Last month, the NDRC reportedly ordered the startup’s co-founders, Xiao Hong and Ji Yichao, to meet its officials and discuss the acquisition. Both were then purportedly asked not to leave China until the review was completed.
Key Background
The Chinese government’s regulatory move comes just weeks before President Donald Trump is set to visit Beijing for a summit meeting with his counterpart, Xi Jinping. The meeting comes amid an ongoing trade war and geopolitical tensions between the two countries, which have also spilled into AI. The U.S. government continues to block the sale of the most advanced Western AI chips to China in a bid to maintain America’s edge. Last week, the U.S. State Department issued a diplomatic cable to its embassies and consulates urging them to raise concerns about China’s alleged bid to steal intellectual property of top American AI companies. The cable focused on the issue of “distillation,” a process of training an artificial intelligence model using outputs from existing advanced models—helping reduce training costs. Earlier this year, OpenAI sent a letter to lawmakers warning that Deepseek was attempting to distill its advanced models.
Further Reading
Inside China’s probe of Meta’s ‘conspiratorial’ $2bn Manus deal (Financial Times)
Leaders of AI Firm Bought by Meta Are Restricted From Leaving China (Wall Street Journal)