China has blocked Meta Platforms Inc’s acquisition of artificial intelligence (AI) start-up Manus, the top economic planning body said yesterday, after a regulatory review in which Beijing reportedly also restricted two cofounders from leaving the country.
Facebook owner Meta had agreed to acquire Manus, an AI agent created by a company founded in China, but is now based in Singapore, the two firms said in December last year.
However, analysts had warned then the deal could fall afoul of regulators amid a fierce technological rivalry between Washington and Beijing.
Photo: AFP
The Financial Times last month reported that China had restricted two Manus cofounders from leaving the country, citing three people with knowledge of the matter.
Chief executive Xiao Hong (肖弘) and chief scientist Ji Yichao (季逸超), who are usually based in Singapore, were reportedly summoned to a meeting in Beijing last month and told they were not allowed to leave China because of a regulatory review of the Meta acquisition.
The Chinese National Development and Reform Commission said in a statement that it would “prohibit the foreign investment in the acquisition of the Manus project,” and that it “requires the parties involved to withdraw the acquisition transaction,” without naming Meta.
Meta said in a statement that “the transaction complied fully with applicable law.”
“We anticipate an appropriate resolution to the inquiry,” it added.
Meta in December last year said that the deal — the financial details of which were not disclosed — would “bring a leading agent to billions of people and unlock opportunities for businesses across our products.”
The purchase was likely aimed at expanding Meta’s AI agent task capabilities, and could be worth more than US$2 billion, Bloomberg Intelligence analysts said.
Manus, created by start-up Butterfly Effect, can sift through and summarize resumes or create a stock analysis Web site.
That move did not come as a surprise, as China has always hoped for greater control over its homegrown technology, analysts said.
“This is the latest in that trajectory of restrictions,” National University of Singapore associate political science professor Chong Ja Ian (莊嘉穎) said.
China and the US “are increasingly looking to separate their tech stacks,” he said, adding that places like Singapore would be increasingly unable to “shield firms from such scrutiny.”
Beijing is trying to send a clear signal that in areas of “strategic priorities” such as AI, it would increase its scrutiny to prevent talent, tech data and capital leakage, said Dylan Loh (駱明輝), an associate professor at Singapore’s Nanyang Technological University.
“It shows they are prepared to act and also securitize the AI space,” Loh added.
Chinese regulators intend to restrict technology firms from accepting US capital without government approval, Bloomberg News reported on Friday last week.
Agencies including the National Development and Reform Commission have told several private firms in recent weeks they should reject capital of US origin in funding rounds unless explicitly approved, Bloomberg said, citing sources familiar with the matter.
“The China government’s decision to block the deal is expected and it has already created some chilling effect on other Chinese AI companies who may now need to rethink their going global approach,” said Chandy Ye (葉春蓉), a dual-qualified Hong Kong solicitor and mainland China lawyer.
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