China blocks Meta’s acquisition of Chinese-founded AI startup Manus

In a significant move reflecting rising tech tensions, China has prohibited Meta's $2 billion acquisition of Manus, an AI startup originally founded in the country. This decision underscores Beijing's apprehensions about losing critical technology to the United States as competition between the two nations escalates. On Monday, China's state planner issued a statement requiring the two companies to unwind the agreement following an investigation launched earlier this year. This intervention is likely to have a chilling effect on China's burgeoning AI startup ecosystem, particularly just weeks before a high-stakes summit between U.S. President Donald Trump and Chinese leader Xi Jinping, where they are expected to address various contentious issues, including trade and technology controls. The blockage of the acquisition highlights the growing divide in global technology development as U.S.-China tensions intensify. It also illustrates the increasingly challenging landscape for cross-border investments in crucial industries such as AI and semiconductors. However, reversing the deal could pose practical complications, as Meta had already integrated Manus into its operations shortly after announcing the acquisition in late December. For Meta, this setback represents a potential loss of an opportunity to bolster its AI capabilities in an increasingly competitive environment against rivals like Google and OpenAI. In response to the decision, a Meta spokesperson asserted that the transaction was fully compliant with relevant laws and expressed expectations for a suitable resolution to the inquiry, though they did not provide further details. Manus, which gained attention for its AI agent capable of autonomously acting on behalf of users, was celebrated in China until its relocation to Singapore and subsequent acquisition by Meta sparked backlash. Some on Chinese social media have labeled the sale as 'treacherous,' accusing the startup of compromising its national interests amid stringent U.S. export controls aimed at curbing China's advancements in key technologies. The swift governmental investigation into the acquisition, initiated in January, appears to serve as a deterrent to other Chinese tech firms considering similar paths. Analysts have cautioned that a heavy-handed response from the Chinese government, such as cancelling the deal, could stifle entrepreneurial spirit and encourage talent to establish businesses outside China. Recently, reports indicated that Beijing had imposed travel restrictions on Manus co-founders Xiao Hong and Ji Yichao as part of the ongoing investigation.