China Blocks Meta’s AI Startup Manus Acquisition Amid Tech Transfer Concerns

China’s National Development and Reform Commission (NDRC) has blocked Meta’s acquisition of artificial intelligence startup Manus, citing concerns over the transfer of advanced technology. In a one-line statement issued on Monday, the commission prohibited the foreign acquisition of Manus and ordered all parties to withdraw from the deal. While the statement did not explicitly name Meta Platforms—owner of Facebook and Instagram—it follows the company’s December announcement of the acquisition.

Manus: AI Startup with Chinese Roots and Global Operations

Manus, a Singapore-based AI company with historical ties to Beijing, provides a general-purpose AI agent capable of performing complex tasks such as coding applications, conducting market research, and preparing financial reports. The NDRC’s decision was made by its Office of the Working Mechanism for Security Review of Foreign Investment, in accordance with Chinese laws and regulations. The announcement came after Chinese authorities revealed in January that they were reviewing the deal for compliance with national regulations.

No Clarification on Rejection, but Geopolitical Tensions Rise

The NDRC did not specify the reasons behind the ban. The decision was announced less than a month before U.S. President Donald Trump was scheduled to meet with Chinese leader Xi Jinping in Beijing in May. Kush Desai, a White House spokesperson, responded by stating that the Trump administration would "continue defending America’s leading and innovative technology sector against undue foreign interference of any sort."

Meta’s Acquisition: A Rare U.S.-China AI Deal

Meta announced in December 2024 that it would acquire Manus, marking a rare instance of a major U.S. tech company purchasing an AI firm with significant Chinese connections. The deal was intended to enhance Meta’s AI capabilities across its platforms. Meta had assured that Manus would have no continuing Chinese ownership interests and would cease operations in China. However, China’s commerce ministry warned in January that all outward investments, technology exports, data transfers, and cross-border acquisitions must comply with Chinese law.

Meta stated that most of Manus’ employees were based in Singapore. Before the acquisition, Manus was under Butterfly Effect Pte, a Singapore-based parent company. However, the startup’s origins trace back to entities registered in Beijing several years prior. Despite the NDRC’s intervention, Manus’ website still indicates that the company "is now part of Meta," suggesting the deal had been finalized before the ban.

Meta Maintains Compliance, but Analysts Warn of Rising AI Scrutiny

In response to the block, Meta issued a statement asserting that the Manus transaction "complied fully with applicable law" and expressed anticipation of a "resolution to the inquiry." Analysts view the decision as a signal of China’s intensified scrutiny of the AI sector amid escalating geopolitical tensions with the U.S. over technological dominance.

"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 firm ABI Research.