Why Meta's $2B Manus acquisition has been blocked by China
What's the story
China has blocked US tech giant Meta's acquisition of Chinese artificial intelligence (AI) start-up Manus. The country's top economic planner, the National Development and Reform Commission (NDRC), cited a ban on foreign investment in the project as the reason for its decision. The NDRC has also ordered all parties involved to withdraw from the transaction.
Strategic protection
China's move to protect AI assets
The NDRC's decision underscores China's determination to protect its AI talent and intellectual property from being acquired by US companies. The move comes as Washington imposes export controls aimed at restricting access to US chips, in a bid to curb China's AI development. Notably, Meta had acquired Manus in December for over $2 billion, as part of a plan to enhance its capabilities in AI agents.
Deal complications
Manus's headquarters moved to Singapore
Following the acquisition, Manus's CEO Xiao Hong and Chief Scientist Ji Yichao were barred from leaving China as regulators reviewed the deal. The company was previously touted by state media as China's next DeepSeek after launching what it claimed was the world's first general AI agent. Later, Manus moved its headquarters from China to Singapore, like many other Chinese companies amid rising US-China tensions.
Tech rivalry
AI a key part of strategic competition
Alfredo Montufar-Helu, a Managing Director at Ankura China Advisors, said China's intervention shows how AI has become a key part of the strategic competition between the world's two largest economies. He added that controls once focused on semiconductors are now extending into AI. Montufar-Helu further noted that China is willing to prevent foreign acquisition of assets it considers important for national security, with AI clearly being one of them.
Investment restrictions
China restricts US investment in top tech firms
Along with blocking Meta's acquisition of Manus, China is also planning to restrict top tech firms, including leading AI start-ups, from accepting US capital without the government's approval. According to a Bloomberg report, Chinese regulators have recently instructed several private tech firms to reject US investment in funding rounds unless explicitly approved. This includes AI start-ups Moonshot AI and StepFun.
Regulatory measures
ByteDance also faces similar restrictions
Along with Moonshot AI and StepFun, TikTok owner ByteDance also faces similar restrictions from Chinese regulators. The authorities do not want the firm to approve secondary share sales to US investors without government approval.