Chinese authorities are demanding that the takeover of AI start-up Manus by the American Meta, which was completed in December, be reversed. Why is Beijing doing this and is it possible? Four questions.
1What is Manus?
At its launch last year, Manus was compared to DeepSeek, the earlier Chinese AI start-up that surprised friend and foe by matching the performance of American rivals such as ChatGPT. But Manus is not a chatbot, like DeepSeek, but a so-called AI agent: a virtual assistant that can independently handle complex tasks. In an introductory video shows how Manus assesses applicants and goes house hunting.
In June last year, the company behind Manus moved to Singapore. In this way, it hoped to become more attractive to foreign investments, says Rogier Creemers, a sinologist at Leiden University who does a lot of research into the Chinese technology sector: “In the US you have all kinds of restrictions on investments in Chinese tech companies, because Washington does not want to facilitate China’s technological development. On paper, Manus has moved the entire nonsense to Singapore, it actually changed passports.” The construction, which is more often used to avoid the complications of the Sino-American rivalry, is ‘Singapore washing’ or ‘China shedding’ named.
Manus was successful: after just a few months, in December, Meta reportedly paid between 2 and 3 billion dollars for Manus. The parent company of Facebook and Instagram wanted to strengthen its own AI services. Manus CEO Xiao Hong joined the leadership of Meta, where he was tasked with shaping the AI strategy.
2Why is the takeover now blocked?
That the takeover would encounter problems became clear when Beijing opened an investigation in January, and especially when Xiao Hong and co-founder Ji Yichao were subsequently summoned to China for hearings and given an exit ban.
The decision to block the sale to Meta was announced on Monday a one-sentence statementwithout explanation. But it seems that the Chinese authorities wanted to draw a red line. AI ranks as one of the important sectors in the country’s new Five-Year Plan, which places great emphasis on technological innovation.
Creemers: “They seem to have used a new legal instrument for foreign investments in sensitive sectors. Because China also does not want sensitive sectors to fall into the hands of foreigners.”
He thinks that the Chinese government wants to send a signal to other AI start-ups that want to monetize their services on the international market. “If you are a member of Team China, we will support you in all kinds of ways, but we expect you to be and remain a team player. You can earn good money with your technology, but don’t think that you can just leave the team.”
3Can China actually block the takeover?
Neither Manus nor Meta has submitted their takeover plans to the Chinese regulator – after all, it is a Singaporean company. Still, China has the means to force a reversal of sales. Not only has it banned the two founders from leaving China, the company also has people and facilities in the country. “The police can simply raid those offices,” says Creemers.
Moreover, China can also seriously hinder Meta, for example with competition investigations. Although Facebook, WhatsApp and Instagram are blocked in China, advertisements from Chinese companies on Meta’s platforms earned the company more than $18 billion in 2024, about 10 percent of its turnover.
The Chinese government is making a very clear choice: you are with us, or you are not
4What are the consequences?
According to The Wall Street Journal Meta prepares to to unbundle the two companies. But that is easier said than done: the question is how deeply Manus’ data and technology have now been integrated into Meta’s services. “Setting the eggs apart is always difficult if a takeover does not go ahead, unless the buyer has kept the matters separate, and that does not seem to be the case here,” a lawyer told the Reuters news agency.
There are also consequences for the Chinese tech sector, Creemers thinks. “The Chinese government makes a very clear choice: you are with us, or you are not. They choose strategic autonomy or self-sufficiency.” Integration of Chinese companies with the American AI sector is unlikely, “especially now that relations between America and China remain quite tense.”
The issue could also be a topic at the meeting between US President Donald Trump and his Chinese counterpart Xi Jinping in Beijing in mid-May, when, in addition to high mutual import duties, restrictions on the export of critical raw materials and technologies are also discussed.
