Meta's $2B AI Deal Faces Chinese Scrutiny Over Export Rules
Regulators in Beijing are reviewing the acquisition of AI startup Manus, citing technology export controls and intensifying the US-China tech rivalry.
Meta Platforms Inc. (META) is facing a new geopolitical hurdle in its aggressive push into artificial intelligence, as Chinese authorities have reportedly begun a review of its roughly $2 billion acquisition of AI startup Manus over potential technology export control violations.
The scrutiny from Beijing introduces significant regulatory uncertainty into a strategic deal for the social media giant and highlights the escalating tensions between the U.S. and China over cutting-edge technology. Despite the concerning development, Meta's shares showed resilience in recent trading, climbing a modest 0.3% to $660.62, as investors weigh the long-term strategic imperative of AI against the immediate regulatory risk.
The acquisition in question involves Manus, an AI company that was originally founded in Beijing under the name Butterfly Effect before it relocated its operations and staff to Singapore in 2025, ahead of the Meta deal. According to a report from the Financial Times, officials from China's commerce ministry are now assessing whether the company's sale to a U.S. entity requires an export license, even after its relocation.
At the heart of the issue is whether intellectual property and technology developed by Chinese engineers in Beijing falls under the country's expanded export control laws. China updated its regulations in 2020 to cover key technologies, including certain types of algorithms, a move widely seen as giving it more power to intervene in global technology transactions that have Chinese origins.
The review underscores the complexities facing global tech companies navigating the fraught relationship between the world's two largest economies. For Meta, a $1.66 trillion company, the Manus acquisition represents a key investment in talent and technology as it competes with Apple, Google, and Microsoft in the rapidly advancing field of artificial intelligence. A significant delay or, in a worst-case scenario, a block of the deal could represent a setback to its AI roadmap.
While the Chinese review is said to be in a preliminary stage and may not result in a formal investigation, the mere possibility of intervention gives Beijing potential leverage. It reflects a broader concern in the Chinese government over a domestic 'brain drain' and the transfer of valuable AI knowledge developed within its borders to U.S. competitors. Conversely, U.S. regulators were reportedly more amenable to the acquisition precisely because Manus had moved its base of operations out of China to Singapore, according to the South China Morning Post.
Wall Street analysts have remained broadly confident in Meta's trajectory, with 60 of 67 analysts covering the stock maintaining a 'Buy' or 'Strong Buy' rating. The company's vast resources and dominant position in social media, coupled with its aggressive investments in the metaverse and AI, underpin this long-term optimism. However, the Manus situation serves as a stark reminder of the unpredictable geopolitical risks that can impact strategic initiatives.
Investors and market-watchers will be closely monitoring for any official statements from Meta or China's Ministry of Commerce. The outcome of this review could set a precedent for future acquisitions of tech firms with Chinese roots, further complicating the global landscape for M&A in the critical artificial intelligence sector.