The Manus logo will appear on your smartphone screen and the Meta logo will appear in the background.
Chen Xin | Getty Images News | Getty Images
Meta Platforms is moving to comply with the Chinese government’s unprecedented deal termination order, with the tech giant beginning to unwind its $2 billion acquisition of Manas, Bloomberg reports.
Meta has completed a business split, ordered employees to stop using Manus tools for internal projects and blocked Singapore-based staff from accessing Facebook’s parent company’s internal data systems starting this month, Bloomberg reported Thursday, citing people familiar with the matter.
The separation comes as Mr. Manus and Mr. Mehta scramble to heed Beijing’s demands to scrap the deal, which is a test of how far China will go to protect its strategic technology and talent.
Chinese regulators ordered the deal to be scrapped in April, an unprecedented move under the country’s foreign investment security review mechanism, and began a complex process to unravel the completed deal, according to Zhonglun Law Firm.
As the U.S.-China tech competition intensifies over talent, hardware and data, Beijing has since tightened tech export controls to better control cross-border transactions, especially those involving assets in strategic areas.
For U.S. tech companies eyeing Chinese assets, “AI that comes from China now has the kind of reversible risk that no sensible deal structure can pay for,” said Matthias Hendricks, a Singapore-based advisor to a global AI firm.
For Manus, the issue at the heart of Beijing’s opposition may not be resolved, Hendricks added. “If another company’s engineers end up in your stack, you can delete the repository, but you can’t hide what they saw.”
Once hailed as a breakthrough for Chinese AI startups against U.S. rivals, Manas has become a wake-up call for entrepreneurs looking to shake off China’s image by relocating to countries like Singapore.
“A rollback could be tricky,” said Han Sheng Lin, Asia Group’s China managing director. He said the Chinese government is sending a message to the tech industry that so-called “Singapore washing” has its limits, and a lesson to the U.S. government that shedding light on ownership structures may be as effective as any ban.
Manas, which has Chinese roots, moved its headquarters and core team to Singapore last year after Meta announced in December that it would acquire the agent AI startup for $2 billion, sparking a months-long investigation into technology export controls.
Earlier this month, the Chinese government issued sweeping new rules tightening controls on foreign transactions for Chinese investors, technology, data and national security reasons.
The rules come as the Chinese and U.S. governments compete to tighten their control over AI. Chinese regulators have reportedly told companies like Moonshot AI, Stepfan, and ByteDance to refuse U.S. investment without explicit government approval, while the U.S. government recently extended AI chip export controls to China-based companies worldwide.
The rules extend Beijing’s reach to trade in markets outside mainland China, including Taiwan, and also give it the power to punish foreign companies whose home countries restrict investment from China.
Tilly Zhang, an industrial policy analyst at Gabekal Dragonomics, said the new foreign investment directive targets deals like Manus, a high-profile move that suggests China’s big AI companies are turning away from the domestic market, and an example of how Beijing doesn’t want other companies to follow suit.
Han said the Chinese government’s new framework essentially gives the country “retroactive and prospective restrictions” on foreign capital. “If Chinese money is agreed, the Chinese government will be able to assert jurisdiction over withdrawal, restructuring and reinvestment.”
The framework, which takes effect on July 1, will for the first time provide a comprehensive and formal legal basis for China to force the unwinding of completed overseas transactions. In particular, it prohibits the cross-border transfer of human resources in sensitive areas without authorization.
