China orders unwinding of Meta’s acquisition of AI startup

(New York Times) The Chinese government said on Monday that it would require the unwinding of Meta’s acquisition of Manus, a Singapore-based artificial intelligence company with Chinese founders, in a move that could chill other Chinese entrepreneurs from seeking tie-ups with foreign partners.

Chinese officials had said in January that they were investigating whether Meta’s acquisition of Manus in December violated the country’s rules on foreign investment. They were also assessing whether the deal violated China’s requirements that companies obtain approval for the export of certain technologies.

The National Development and Reform Commission, a high-level ministry that oversees economic planning and plays a central role in setting China’s A.I. policy, said on Monday that it had decided to prohibit foreign investment in Manus, and instructed the parties involved to withdraw the acquisition.

It is not clear how such a transaction would be unwound. Meta has described the two teams as “deeply integrated.” Members of the Manus team have been working alongside Meta colleagues at the company’s office in Singapore, according to two people familiar with the operation who spoke on the condition of anonymity because they were not authorized to talk publicly.

In a statement, Meta said the transaction fully complied with law, adding “We anticipate an appropriate resolution to the inquiry.”

The Chinese government issued its decision just a few weeks before a planned meeting between President Trump and China’s leader, Xi Jinping.

The New York Times reported last month that officials from the Chinese agency had called in Meta and Manus executives to express concerns about the deal, and that Manus executives had been restricted from departing China, as part of an apparent effort to discourage Chinese A.I. executives from moving businesses offshore.

As companies in China and the United States race to develop cutting-edge artificial intelligence, the scrutiny could make it harder for other Chinese firms to attract funding from foreign investors. It could also signal to Chinese researchers not to follow the path Manus took, in which Chinese executives register companies outside China to sidestep regulations from both Washington and Beijing.

Manus is based in Singapore but was founded by Chinese engineers and had a Chinese parent company. The company was incorporated offshore and set up in China as a foreign-owned entity; it has affiliated offices in Beijing and Wuhan, China.

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