Beijing (AFP) – China has blocked Meta’s acquisition of AI startup Manus, the top economic planning body said Monday, after a regulatory review that reportedly also saw Beijing restrict two co-founders from leaving the country. Facebook owner Meta had agreed to acquire Manus, an artificial intelligence agent created by a company founded in China but now based in Singapore, the two firms said in December. Analysts, however, had warned then that the deal could fall foul of regulators at a time of fierce technological rivalry between Washington and Beijing.
The Financial Times reported last month that China had restricted two Manus co-founders from leaving the country, citing three people with knowledge of the matter. Chief executive Xiao Hong and chief scientist Ji Yichao, who are usually based in Singapore, were reportedly summoned to a meeting in Beijing in March and told they were not allowed to leave China because of a regulatory review of the Meta acquisition.
Beijing’s National Development and Reform Commission said in a statement on Monday that it will “prohibit the foreign investment in the acquisition of the Manus project” and “requires the parties involved to withdraw the acquisition transaction”, without naming Meta. Meta told AFP in a statement that “the transaction complied fully with applicable law”. “We anticipate an appropriate resolution to the inquiry,” it added. Meta said in December 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”. Bloomberg Intelligence analysts said the purchase was likely aimed at expanding Meta’s AI agent task capabilities, and that it could be worth more than $2 billion. Manus, created by startup Butterfly Effect, can sift through and summarize resumes or create a stock analysis website, according to its website.
Analysts said this move did not come as a surprise as China has always hoped for greater control over its homegrown technology. “This is the latest in that trajectory of restrictions,” said Chong Ja Ian, an associate professor of political science at the National University of Singapore. China and the United States “are increasingly looking to separate their tech stacks,” he told AFP, 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 will increase its scrutiny to prevent talent, tech data, and capital leakage, said Dylan Loh, 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. 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,” Chandy Ye, a dual-qualified Hong Kong solicitor and mainland China lawyer, told AFP.
© 2024 AFP
