Meta Shares Slide as China Probes AI Startup Acquisition
Beijing's review of the Manus deal, citing export control laws, injects regulatory uncertainty into Meta's AI and metaverse hardware ambitions.
Shares in Meta Platforms (NASDAQ: META) fell on Tuesday after China’s Ministry of Commerce announced it is reviewing the company's acquisition of Dutch haptics and artificial intelligence startup Manus, creating a new regulatory hurdle for the tech giant’s metaverse strategy.
Meta's stock closed down 1.81%, a decline of $11.93, to finish the session at $648.69 as investors reacted to the news. The probe from Beijing introduces significant uncertainty into a deal considered key to the hardware and AI development within Meta's Reality Labs division.
The review centers on whether the acquisition violates China's stringent technology export control laws. Manus, while now based in the Netherlands, was originally founded in China, and much of its foundational AI technology was developed there. Chinese authorities are now scrutinizing the transfer of this technology and intellectual property ahead of the sale to the US tech behemoth. A ministry spokesperson confirmed it would assess the deal’s compliance with regulations governing export controls and foreign investment.
According to a report from CNBC, the probe is in its early stages and may not escalate to a formal investigation. However, the intervention itself signals Beijing's growing intent to claim jurisdiction over advanced technologies developed within its borders, even if the companies later relocate. If Chinese regulators determine an export license was required, it could give them the leverage to impose conditions on the deal or potentially force the parties to abandon it altogether.
The acquisition of Manus is strategically important for Meta. The startup specializes in advanced haptics technology, which provides users with a sense of touch in virtual environments, and so-called "agentic AI systems" capable of autonomous decision-making. These technologies are critical for creating the kind of immersive experiences Meta has staked its future on with the metaverse. A failure to integrate Manus could represent a significant setback for the development of future VR and AR hardware.
With a market capitalization that still exceeds $1.6 trillion, Meta remains a dominant force in the technology sector, boasting a strong consensus among analysts, with 60 recommending a 'Buy' or 'Strong Buy' on the stock against just seven 'Holds'.
This move by China is the latest example of the complex geopolitical and regulatory landscape facing major technology firms. It highlights a widening battle for dominance in strategic technologies like artificial intelligence. The scrutiny comes as Meta and other platform operators also face growing regulatory pressure in the West. For instance, the UK recently made cyberflashing a priority crime under its Online Safety Act, placing new obligations on tech platforms to police content.
For investors, the Chinese review of the Manus deal adds a fresh layer of risk to Meta's long-term vision. The market will be closely watching for any signals from Beijing on whether the preliminary review will become a formal investigation, a move that could have lasting implications for Meta's competitive position in the race to build the next generation of computing platforms.