China Blocks Meta's Acquisition of AI Startup "Manus"

The Chinese government has blocked the acquisition of Manus, a Chinese artificial intelligence (AI) startup dubbed the "second DeepSeek," by the U.S. company Meta.

According to Bloomberg on the 27th (local time), the National Development and Reform Commission of China announced, "In accordance with laws and regulations, we have decided to prohibit foreign capital from acquiring the Manus project," adding, "We have requested the relevant party (Meta) to withdraw from the acquisition deal."

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Manus is a general-purpose AI agent developed by the Chinese startup Butterfly Effect and has garnered significant attention as the "second DeepSeek." However, its approach to fundraising differed from that of DeepSeek. While DeepSeek sought an initial public offering (IPO) with the full support of the Chinese government, Manus relocated its headquarters to Singapore in July last year and attracted investment from Silicon Valley, seeking a merger and acquisition (M&A) opportunity.

In December last year, Manus signed a sale agreement with Meta valued at 2 billion dollars (approx. 3 trillion won). This deal was praised as a model case for Chinese startups aiming to go global, but it also drew criticism within China for selling a core AI company to the United States.

Ultimately, in January, According to China's Ministry of Commerce, the agency announced it would review whether the Manus acquisition falls under export controls, effectively putting a halt to Meta's acquisition attempt. Three months after the acquisition process was put on hold, China officially blocked the deal.

Financial Times (FT) reported that Manus founder and CEO Xiaohong, as well as Chief Science Officer (CSO) Ji Yichao, have reportedly been banned from leaving the country by Chinese authorities. They were investigated for possible violations of foreign direct investment (FDI) regulations in relation to their Chinese-registered entity.

Bloomberg noted that Meta could be impacted by this decision. Meta, which is currently engaged in fierce competition with Microsoft, Alphabet, OpenAI, and Anthropic, had planned to strengthen its competitiveness in the AI agent sector through the acquisition of Manus. In a statement, Meta said the deal complied with all relevant laws and that it looks forward to resolving the ongoing investigation by Chinese authorities.

It is also noteworthy that this decision came just ahead of a summit between U.S. President Donald Trump and Chinese President Xi Jinping. The Chinese government's move is interpreted as an attempt to prevent American investors from acquiring stakes in industries sensitive to national security. Bloomberg pointed out that as Chinese startups and companies seek to expand globally, regulatory authorities are increasingly concerned about the outflow of domestic technology overseas.

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