China has launched a sweeping investigation into Meta’s $2bn acquisition of artificial intelligence start-up Manus, transforming what was initially seen as a landmark tech deal into a national security flashpoint. According to reporting originally published by Financial Times, Beijing has characterised the transaction as a “conspiratorial” attempt to weaken the country’s technological base, prompting a coordinated response from multiple government agencies.
The assessment came from China’s National Security Commission, a powerful body led by President Xi Jinping, whose findings are typically reviewed by senior Communist Party leadership. Reached shortly after the deal was announced in December 2025, the conclusion elevated the acquisition from a routine corporate transaction to a matter of strategic importance, placing it firmly within China’s broader geopolitical and technological rivalry with the United States.
Regulators have since mobilised across several institutions, including the National Development and Reform Commission, the commerce ministry, and the country’s antitrust watchdog. Officials are examining the deal through a wide legal lens, exploring potential violations related to export controls, foreign investment regulations, and competition law. The case has become a test of how Beijing intends to manage the flow of technology, talent, and capital beyond its borders.
For Manus, the consequences have been immediate and uncertain. The company, which had already relocated its headquarters and core team from Beijing to Singapore, now faces an unpredictable future. In March, co-founders Xiao Hong and Ji Yichao were summoned by Chinese authorities to address concerns over possible regulatory breaches. Both have reportedly been barred from leaving China while the investigation continues.
The unfolding situation highlights a dramatic shift in Beijing’s stance. Just months earlier, when Manus moved its operations overseas, regulators had concluded that the company did not possess sensitive technology requiring strict controls. At the time, officials believed its capabilities could be easily replicated and did not pose a significant risk. That earlier judgment is now under intense scrutiny as political pressure mounts, with some officials reportedly seeking to revise or “correct” their initial assessment.
Manus’s rapid rise had already drawn significant attention. In early 2025, the company launched a product that quickly gained traction for its use of “agentic” artificial intelligence, capable of performing complex, multi-step tasks. Demand surged, with early access codes reportedly selling for thousands of dollars and more than a million users joining waiting lists. However, the enthusiasm was short-lived, as critics questioned the originality of the technology, arguing that it relied heavily on existing models developed by other firms.
Despite skepticism, Manus secured substantial investment and achieved rapid revenue growth, reaching nearly $100mn in annual income driven largely by subscriptions. Its relocation to Singapore was seen as a strategic move to access international capital and advanced AI systems, particularly those developed in the United States. Yet the decision also sparked backlash within China, where some viewed it as an abandonment of domestic resources and talent.
The subsequent acquisition by Meta unfolded rapidly, reportedly completed within just two weeks of initial discussions. Neither company notified Chinese regulators before announcing the deal, a factor that may have contributed to the intensity of the response. Initially celebrated as a rare success story—a Chinese start-up achieving a high-value exit through a global tech giant—the transaction quickly came under scrutiny.
Early reviews by China’s commerce ministry did not identify clear violations of export control rules. However, the intervention of the National Security Commission shifted the tone dramatically, triggering a broader and more aggressive investigation. The deal’s classification as “conspiratorial” has raised the stakes, with authorities now exploring options that could include unwinding the transaction.
Such a move would be complex. Meta has already integrated Manus’s technology into its advertising systems, making any reversal technically and commercially challenging. Nonetheless, some Chinese investors who sold their stakes have reportedly discussed the possibility of reversing the deal in an effort to address regulatory concerns.
The case underscores a broader dilemma facing Chinese policymakers. On one hand, there is a desire to prevent domestic technology firms from relocating abroad and selling to foreign buyers, particularly in sensitive sectors like artificial intelligence. On the other, overly aggressive intervention risks discouraging innovation and driving talent out of the country.
Officials appear divided on how to proceed. Some warn that punitive measures could send a chilling signal to the tech sector, undermining China’s ambitions to remain competitive on the global stage. Others argue that stricter controls are necessary to safeguard national interests and prevent the loss of valuable intellectual property.
The government has attempted to strike a careful balance. Public statements emphasise support for cross-border business and technological cooperation, provided such activities comply with Chinese laws and procedures. Meta, for its part, has maintained that the transaction adhered to all applicable regulations and expressed confidence in a resolution.
As the investigation continues, the outcome of the Manus deal is likely to have far-reaching implications. Beyond the immediate companies involved, it will shape how China navigates the complex intersection of national security, economic growth, and global technological competition in the years ahead.
