China orders unwinding of Meta's $2bn acquisition of AI firm Manus
The regulator has ruled that Manus's deep roots in Chinese technology, talent and data pose a threat to industrial security, marking a significant escalation in cross-border tech regulation
China's National Development and Reform Commission (NDRC) has ordered the unwinding of Meta's acquisition of artificial intelligence startup Manus, a deal valued at more than $2 billion. The decision, made under the national security review mechanism for foreign investments, marks a rare intervention by the powerful state planner to block a completed takeover.
Although Manus relocated its headquarters to Singapore following U.S. investment, the regulator determined that the company's underlying connections to China in terms of technology, talent and data presented a risk to industrial security. Officials emphasised that the location of incorporation or the management team does not negate these deep-rooted ties, effectively drawing a bright red line against the sale of Chinese AI assets to American firms.
The complexity of the unwinding process is expected to be significant, potentially involving the reversal of equity transfers, the return of funds, and the deletion of transferred code and intellectual property. Legal experts note that fully reversing such transactions in knowledge-intensive sectors is often difficult, particularly where information has already been absorbed by engineers or transferred during due diligence.
Meta has stated that the transaction complied fully with applicable law and anticipates an appropriate resolution to the inquiry. However, it remains unclear how the California-based tech giant will technically reverse the acquisition given that Manus had already been integrated into its operations. The firm did not immediately respond to requests for further comment on the specific steps it plans to take.
This regulatory move comes weeks before a planned mid-May summit between U.S. President Donald Trump and Chinese President Xi Jinping in Beijing. The decision heightens the risk for global investors looking to invest in advanced technology firms with ties to China, suggesting that paper relocation strategies may no longer be sufficient to mitigate deal certainty risks.
Analysts advise that investors in China-founded businesses will now demand real operational separation, such as IP assignment and R&D relocation, rather than simple corporate relocations. The case serves as a stark reminder that Beijing views AI as a sensitive sector critical to national security and is actively controlling outbound flows of technology and intellectual property.
