NEW DELHI — China has blocked a proposed $2 billion acquisition by Meta of artificial intelligence startup Manus, citing national security concerns, in a move that underscores tightening regulatory scrutiny of cross-border technology deals, according to a new report.
The decision, reported by Modern Diplomacy, was issued by China’s National Development and Reform Commission (NDRC), which ordered the deal to be unwound under foreign investment security rules introduced in 2021.
Authorities reportedly based their decision not on the company’s place of incorporation but on its underlying links to China, including its technology development and potential data security risks.
The move highlights Beijing’s increasingly firm stance against the transfer of sensitive AI capabilities to foreign entities, particularly U.S.-based companies, and is expected to raise caution among global investors evaluating similar transactions.
Manus, an emerging player in the AI sector, had previously attracted funding from U.S. investors and later relocated its base overseas. However, regulators are said to have taken a stricter view of the company’s continued connections to Chinese talent and infrastructure.
As part of the regulatory action, the deal is expected to be reversed, a process that will likely involve unwinding equity transfers and returning capital and intellectual property — a complex undertaking in knowledge-intensive industries such as artificial intelligence.
The development reflects broader challenges facing China-linked technology firms seeking to expand globally, as regulatory oversight intensifies in strategic sectors.
It also signals that companies with significant operational or technological ties to China may remain subject to domestic regulations regardless of where they are incorporated.
Analysts said the move could heighten perceived risks in cross-border acquisitions, particularly those involving U.S. buyers, and may push investors to seek clearer separation of operations, intellectual property, and research activities in future deals. (Source: IANS)
