The Chinese government has officially blocked Meta’s planned $2 billion acquisition of Manus, a Chinese-founded AI startup, marking a significant escalation in the ongoing technological rivalry between the United States and China.
CNBC reports that China’s National Development and Reform Commission (NDRC) foreign investment review arm issued a decision on Monday to block the sale of Manus to Mark Zuckerberg’s Meta. The regulatory body ordered all parties involved in the transaction to unwind the acquisition, effectively terminating the deal that was announced in late December.
Manus emerged as a prominent player in the AI sector when it launched in March of last year with an AI agent designed to autonomously perform complex tasks. These capabilities include writing research reports, preparing presentation slides, and building websites. The launch garnered significant attention from Chinese state media, which celebrated it as the country’s latest breakthrough AI product. This recognition came on the heels of Deepseek’s AI model launch, which had previously caused substantial fluctuations in major United States technology stocks.
Early versions of Manus were developed by Beijing Butterfly Effect Technology, a Chinese startup founded in 2022, according to the Wall Street Journal. Following its launch, the AI company made a strategic decision to relocate its headquarters and top engineers from Beijing to Singapore. This move aligned with a broader trend among Chinese AI firms seeking to navigate the complex geopolitical landscape between the United States and China. By establishing operations in Singapore, these companies believe they can circumvent some of the tensions between the two superpowers while gaining access to Western AI models and potential investors.
According to the Financial Times, the NDRC had initially approved Manus’ relocation to Singapore. However, complications arose when Meta and the startup failed to inform Chinese authorities before finalizing their acquisition agreement in December. This appears to have triggered the subsequent regulatory scrutiny and ultimate rejection of the deal.
The Chinese government’s response to the Meta-Manus transaction was swift and decisive. In January, mere days after the two companies publicly announced the acquisition, Chinese officials launched an investigation into potential national security concerns and possible export control violations. The probe intensified last month when the NDRC reportedly summoned the startup’s co-founders, Xiao Hong and Ji Yichao, to meet with its officials to discuss the acquisition details. Both co-founders were subsequently instructed not to leave China until the regulatory review concluded.
In a statement to Breitbart News, a Meta spokesperson wrote: “The transaction complied fully with applicable law. We anticipate an appropriate resolution to the inquiry.”
This regulatory intervention occurs against a backdrop of heightened tensions between Washington and Beijing over advanced AI technologies. The timing is particularly notable as it comes just weeks before President Donald Trump is scheduled to visit Beijing for a summit meeting with Chinese President Xi Jinping. The upcoming meeting takes place amid an ongoing trade war and escalating geopolitical tensions between the world’s two largest economies, with artificial intelligence emerging as a central battleground.
Breitbart News recently reported that the Trump White House has accused China of “industrial-scale theft” of AI technology:
“The U.S. government has information indicating that foreign entities, principally based in China, are engaged in deliberate, industrial-scale campaigns to distill U.S. frontier AI systems,” said the memo from OSTP Director Michael Kratsios, as first seen by the Financial Times (FT) on Thursday.
“Model distillation” means harvesting the output from existing large AI systems to create smaller ones, rather like a cuckoo bird laying its eggs in the nests of other birds. As with many techniques, there are legitimate and illegitimate ways to distill.
Breitbart News social media director Wynton Hall has written his instant bestseller Code Red: The Left, the Right, China, and the Race to Control AI to serve as the definitive guide on how the MAGA movement can create positions on AI that benefit humanity without handing control of our nation to the leftists of Silicon Valley or allowing the Chinese to take over the world.
Senator Marsha Blackburn (R-TN), who was named one of TIME’s 100 Most Influential People in AI, praised Code Red as a “must-read.” She added: “Few understand our conservative fight against Big Tech as Hall does,” making him “uniquely qualified to examine how we can best utilize AI’s enormous potential, while ensuring it does not exploit kids, creators, and conservatives.” Award-winning investigative journalist and Public founder Michael Shellenberger calls Code Red “illuminating,” ”alarming,” and describes the book as “an essential conversation-starter for those hoping to subvert Big Tech’s autocratic plans before it’s too late.”
Read more at CNBC here.
Lucas Nolan is a reporter for Breitbart News covering issues of AI, free speech, and online censorship.