China has ordered Meta Platforms to unwind its December 29 acquisition of artificial intelligence startup Manus, exposing a recurring dilemma for Beijing: the desire for its technology champions to go global without leaving home. Manus, an AI startup, develops agents capable of handling complex tasks, from booking travel to managing spreadsheets, with minimal human input. Issued on April 27, this directive from the National Development and Reform Commission sends a clear message to local entrepreneurs.
Engineers Red Xiao and Ji Yichao launched Manus about a year ago under a Chinese parent. Prior to Meta’s involvement, Manus largely extricated itself from China, closing its offices and shifting operations to Singapore after securing $75 million from U.S. venture capital firm Benchmark. Its employees subsequently relocated to Meta offices there. Meta affirmed the startup would exit China entirely.
Beijing is now belatedly attempting to reassert control, with the co-founders reportedly banned from leaving China during the regulatory review. Unwinding the deal presents significant challenges, including how Meta would recover funds from earlier backers such as Chinese tech giant Tencent. Integration of personnel, code, and intellectual property further complicates separation. Meta, whose apps do not operate in mainland China, stated the transaction complied fully with applicable law, anticipating an appropriate resolution.
This episode underscores growing tensions surrounding artificial intelligence. Beijing officials appear to have underestimated Manus’s strategic value, reacting only after the firm decamped and was acquired. The fallout is expected to feature in upcoming U.S.-China diplomatic discussions. This deterrence effort clearly signals to local firms that pursuing international capital and suitors outside of China will not be an easy path, highlighting national limitations despite ambitions in cutting-edge technology.
