China has ordered Meta to unwind its $2 billion acquisition of Manus, a Singapore-based artificial intelligence firm with Chinese roots, in a move that underscores tightening control over cross-border tech deals.
The directive came from the National Development and Reform Commission, which said the decision to prohibit foreign investment in Manus was made in accordance with existing laws and regulations.
Authorities have now instructed all parties involved to withdraw from the transaction.
AI Deal Caught Between Beijing and Washington
The blocked deal had already drawn scrutiny from both China and the United States, reflecting growing geopolitical tensions around artificial intelligence.
In Washington, lawmakers have restricted American investments in Chinese AI firms, while Beijing has simultaneously discouraged local startups from relocating abroad to bypass oversight.
Manus—originally founded in China before relocating to Singapore—had become a prime example of this so-called “Singapore-washing” strategy, where firms shift headquarters to avoid regulatory friction.
The Chinese government’s intervention is now sending shockwaves through the startup ecosystem, particularly among founders and venture capitalists exploring cross-border expansion.
Why Manus Matters in the AI Race
Manus has quickly emerged as a rising player in the AI space, developing general-purpose AI agents capable of handling tasks such as coding, data analysis, and market research.
The startup reportedly surpassed $100 million in annual recurring revenue within months of launching its product—an unusually rapid growth trajectory that drew comparisons to leading AI disruptors.
The company had also secured significant backing, including a $75 million funding round led by global venture capital firm Benchmark.
For Meta, the acquisition was part of a broader strategy to scale AI capabilities across its platforms, including its Meta AI assistant and enterprise tools.
Regulatory Pressure Reshaping Tech Deals
China’s Ministry of Commerce had already launched a review into the deal earlier this year, examining compliance with export controls and technology transfer regulations.
Despite Meta maintaining that the acquisition complied with applicable laws, Beijing’s final decision highlights a more assertive stance on protecting domestic AI innovation.
The move also signals that even indirect foreign ownership—through relocated or restructured entities—may face increasing resistance.
China’s decision could reshape how global tech giants approach AI investments, particularly those involving companies with Chinese origins.
For startups, it complicates strategies aimed at attracting international capital while maintaining operational flexibility.
And for the broader AI race, it reinforces a growing reality: innovation is no longer just about technology—it’s about geopolitics, regulation, and control.
