China Pressures 'Second DeepSeek' Manus After Meta Acquisition... Founders Banned from Leaving Country

According to a report by the Financial Times (FT) on March 24 (local time), Chinese authorities have imposed an exit ban on two co-founders of Manus, a China-based artificial intelligence (AI) startup acquired by Meta.

According to three sources familiar with the matter, Xiao Hong, CEO of Manus, and Chief Scientist Ji Yichao were recently summoned to a National Development and Reform Commission meeting in Beijing. It is reported that they were questioned regarding possible violations of foreign direct investment regulations.

Meta logo. Photo by Reuters and Yonhap News

According to two of the sources, following this meeting, the two founders were notified that they are not allowed to leave China while regulatory review is underway. However, they are allowed to travel within the country. China has previously prohibited company executives under investigation from leaving the country.

Earlier on March 17, the New York Times (NYT) reported that the Manus management team could be subject to exit restrictions.

FT reported that, so far, no official investigation has begun, nor has anyone been charged. According to one source, Manus is currently searching for law firms and consulting companies to help resolve the issue.

Manus, an AI company sometimes referred to as the "second DeepSeek," was founded in China. Amid escalating U.S.-China tensions, the company relocated its headquarters and key staff to Singapore last year, and in December Meta acquired the company for 2 billion dollars.

Chinese authorities are reportedly reviewing whether the transaction may have violated export control regulations, which require prior approval for the export of certain technologies. According to sources, suspicions regarding violations of foreign direct investment rules are related to whether China’s reporting requirements were met following changes in Manus’s ownership structure. Even if such violations are confirmed, the likelihood of severe punishment is low, but FT reported that authorities are seeking ways to intervene in the transaction.

According to one source, in the worst-case scenario, invalidating the transaction is being considered. However, as the deal has already been completed and Meta has begun integrating Manus’s AI agent software into its own platform, it is expected that nullifying the transaction would be difficult.

FT assessed that the case demonstrates the Chinese leadership’s concerns about promising companies in strategic sectors like AI being transferred overseas. There are also growing concerns that other companies may follow Manus’s example by moving to Singapore to circumvent Chinese regulations.

Meta stated, "This transaction was fully compliant with applicable laws and regulations," adding, "We expect the investigation to be resolved appropriately."

This content was produced with the assistance of AI translation services.