Manas was hailed as “the next Deep Seek” by Chinese state media shortly after it launched in March 2025, just months before relocating to Singapore.
Chen Xin | Getty Images News | Getty Images
BEIJING—China’s decision to block U.S. tech giant Meta’s $2 billion acquisition of artificial intelligence startup Manas is seen by analysts as a warning to tech entrepreneurs.
“It’s clear that after Manasgate, founders will learn that if you start in China, you stay in China,” said Duncan Clarke, an early advisor to Alibaba and chairman of consulting firm BDA China.
“We know the deal was already in trouble,” he said, “but this difficult development is on the more extreme side of the expected outcome.”
The timing is notable as it comes just days before Meta’s earnings report, scheduled for Wednesday local time, and less than a month before U.S. President Donald Trump’s visit to Beijing, where he is scheduled to discuss trade and investment.
The case also has a direct impact on how companies and investors position themselves in the U.S.-China tech race as they navigate new risks to data, talent, and intellectual property.
For Chinese AI startups and U.S. investors, “the bottom line is that Singapore incorporation alone does not exempt a transaction from the impact of Chinese regulations,” said Chris Pereira, president and CEO of consulting firm iMpact.
“The broader implication is that a new front in the competition between the United States and China has just opened: talent itself,” he said.
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Chinese authorities on Monday demanded those involved in the deal retract, just months after launching an investigation. It was not immediately clear how the unwinding process would proceed.
Analysts said the decision could send a signal to founders about moving sensitive technology overseas.
“More than models or AI agents, what China is most concerned about is whether China’s strategically sensitive technology and the data and talent behind it will be effectively transferred offshore through Singapore’s corporate restructuring,” said Winston Ma, an adjunct professor at New York University School of Law.
“The most complex aspect of this transaction being unwound in the digital world is data reversal,” Ma said, noting that it is much more difficult than reversing a physical commodity transaction.
A Meta spokesperson told CNBC that the transaction was “in full compliance with applicable law. We look forward to an appropriate resolution to the investigation.” Manus did not immediately respond to CNBC’s request for comment.
“The reality is that China has no leverage over Meta,” said Gary Dvorchak, managing director of Blueshirt Group. Facebook’s parent company’s social media platform is blocked by an internet firewall in China.
Dvorchak said that compared to its operations in the European Union, Meta “doesn’t produce anything in China,” so the company could ignore the Chinese government and proceed with the deal. But he added that the Chinese government could disrupt Manus’ operations and “a merger could render the startup essentially worthless to Meta.”
Meta revealed that about 11% of its 2024 revenue will come from China, but did not release that figure for 2025. Europe accounted for more than 20% of Meta’s revenue in 2024 and 2025.
In its 2025 annual report, Meta noted that the company generates “significant revenue from a small number of resellers that serve advertisers based in China,” but warned that regulatory actions, including the U.S.-China conflict, could pose a risk to the company’s financial performance.
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The Chinese government’s move to block the takeover appears to be the first use of foreign investment safety screening measures that China introduced at the end of 2020.
Reflecting the weight of national security concerns, the regulations established a dedicated office under China’s economic planning agency, the National Development and Reform Commission.
The measure required companies to seek approval for transactions involving national security concerns before making overseas investments “directly or indirectly” in mainland China. It’s unclear whether Mr. Mehta or Mr. Manus were required to do so or if they contacted regulators beforehand. According to reports, the Chinese government began reviewing the agreement after it was announced.
“The initial research and development of Manus was conducted in China, and its core data originated from China,” Chinese state-run tabloid Global Times said in the English version of an editorial overnight.
“The important issue is not where the company is registered or where the team is currently based,” the editorial said. “Rather, it depends on the extent of the technology, talent and data ties with China and whether the deal is likely to undermine China’s industrial security and development interests.”
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After OpenAI’s ChatGPT took the world by storm in 2022, Washington tightened restrictions on chip exports to China, limiting access to a lucrative market for companies like Nvidia.
China is pushing for technology self-sufficiency but is struggling to catch up. The rise of companies like DeepSeek in January 2025 became a moment of national pride.
Open-source AI models did not rely on overseas-trained personnel. DeepSeek has also reduced the cost of using AI despite the US restricting access to China’s high-end chips.
Building on this enthusiasm, Manas launched an AI tool on March 5, 2025 that takes technology to the next level, from idea generation to autonomous completion of tasks.
Chinese state media hailed the launch as “the next Deep Seek.” The Beijing city government was quick to emphasize that Manus was developed by a local high-tech company called Beijing Hongcho Technology.
However, Manas reorganized as a Singapore-based company by July 2025. In March, China outlined plans to transform its technology ambitions in its latest five-year development plan.
BDA’s Clark said China “wants to avoid a situation where Chinese talent backs up U.S. companies in the AI race,” noting that Chinese talent makes up about half of the global AI engineering pool in biotech and many other fields.
“They don’t want people or companies to bend the rules or circumvent the rules. This is what they jumped on with Ant Group’s IPO cancellation, Didi Chuxing’s US listing and delisting, and now Manas.”
There is also a flip side.
“The Manus incident could further divide the AI ecosystem with China.” [the] “The US is blocking foreign AI talent from returning to China,” said Dan Wang, director of Eurasia Group’s China team.
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