China blocks Meta's $2 billion takeover of AI startup Manus (4 minute read)
China blocked Meta's $2 billion acquisition of AI startup Manus, demonstrating Beijing's willingness to prevent foreign ownership of Chinese-origin AI companies even after they relocate abroad.
Deep dive
- China's state planner blocked Meta's $2 billion acquisition of Manus despite the startup having relocated from China to Singapore, establishing a precedent for Beijing's extraterritorial regulatory reach over AI companies with Chinese origins
- The intervention specifically targets the "Singapore-washing" strategy where Chinese AI companies relocate to the city-state to circumvent both U.S. investment restrictions on Chinese AI firms and Beijing's efforts to retain domestic AI talent and technology
- Manus had achieved significant growth milestones, reaching $100 million in annual recurring revenue just eight months after product launch in March 2025, which the company claimed made it the fastest startup worldwide to hit that benchmark
- The startup raised $75 million led by U.S. venture capital firm Benchmark in April 2025 and was compared to DeepSeek after launching its first general AI agent
- Meta intended to integrate Manus's AI agent technology into its consumer and enterprise products including Meta AI assistant to accelerate automation capabilities
- China's Ministry of Commerce launched an investigation in January 2026 examining compliance with export controls, technology import/export regulations, and overseas investment laws
- The blocked deal creates regulatory uncertainty for venture capitalists and tech founders who had relied on corporate relocations to navigate the increasingly complex U.S.-China technology rivalry
- U.S. lawmakers have prohibited American investors from directly backing Chinese AI companies, creating pressure for Chinese startups to relocate or restructure before seeking Western funding or acquisition
- Meta shares closed slightly higher despite the news, suggesting investors may have anticipated regulatory challenges or view the deal as relatively minor to Meta's overall business
- The decision represents an escalation in China's efforts to retain control over AI technology development and prevent brain drain of Chinese AI talent to Western tech giants
Decoder
- Singapore-washing: The practice of Chinese companies relocating headquarters to Singapore to avoid regulatory scrutiny from both Beijing and Washington while maintaining business operations
- ARR (Annual Recurring Revenue): A metric measuring the yearly value of recurring subscription or contract revenue, commonly used to evaluate SaaS and subscription-based businesses
- General-purpose AI agents: AI systems capable of performing a wide variety of tasks autonomously (like coding, research, data analysis) rather than being specialized for a single function
- NDRC (National Development and Reform Commission): China's top economic planning agency that oversees major investments, industrial policy, and strategic economic decisions
Original article
China's state planner on Monday called for Meta to unwind its $2 billion acquisition of Manus, a Singaporean artificial intelligence startup with Chinese roots.
The decision to prohibit foreign investment in Manus was made in accordance with laws and regulations, the National Development and Reform Commission said in a brief statement. It added that it has asked the parties involved to withdraw the acquisition transaction.
Shares of Meta closed 0.53% higher on Monday.
The deal had attracted scrutiny from both China and Washington, as lawmakers in the U.S. have prohibited American investors from backing Chinese AI companies directly. Meanwhile, Beijing has increased efforts to discourage Chinese AI founders from moving business offshore.
The Chinese government's intervention in the transaction drew alarm among tech founders and venture capitalists in the country who were hoping to take advantage of the so-called Singapore-washing model, where companies relocate from China to the city-state to avoid scrutiny from Beijing and Washington.
Manus was founded in China before relocating to Singapore. The company develops general-purpose AI agents and launched its first general AI agent in March last year, which can execute complex tasks such as market research, coding and data analysis. The release saw the startup lauded as the next DeepSeek.
Manus said it had passed $100 million in annual recurring revenue, or ARR, in December, eight months on from launching a product, which it claimed made it the fastest startup in the world at the time to hit the milestone from $0.
The company raised $75 million in a round led by U.S. VC Benchmark in April last year.
When Meta announced the deal late last year, the tech giant said it would look to accelerate artificial intelligence innovation for businesses and integrate advanced automation into its consumer and enterprise products, including its Meta AI assistant.
But in January, China's Ministry of Commerce said it would conduct an assessment and investigation into how the acquisition complied with laws and regulations concerning export controls, technology import and export, and overseas investment.
A Meta spokesperson told CNBC that the transaction "complied fully with applicable law," and that it anticipated "an appropriate resolution to the inquiry."
When asked about China's move to block Meta's acquisition of Manus, APEC Senior Officials Meeting Chairman Chen Xu told reporters that it is "important that all parties act in a spirit of mutual benefit."
While Chen said he did not know the specifics of the issue, he said that "if such an issue can be handled properly, it can help facilitate more substantive discussions in APEC." That's according to an official English translation.