Meta's $2bn acquisition of AI start‑up Manus ignited a firestorm in Beijing. The National Security Commission, chaired by Xi, branded the deal “conspiratorial” and ordered a sweep across regulators. Agencies from the NDRC to the antitrust watchdog now scrutinise export controls, foreign‑investment and competition rules, turning the once‑heralded exit into a political flashpoint. The move signals Beijing’s willingness to apply national‑security criteria to cross‑border M&A, even for modest AI firms.

Manus, which relocated from Beijing to Singapore after a viral “agentic” AI launch, saw its founders summoned by the NDRC in March and barred from leaving. Investors who sold shares to Meta have begun informal talks about unwinding the transaction, but Meta has already embedded Manus tech into its ad platform, complicating any reversal. Both co‑founders, Xiao Hong and Ji Yichao, remain under investigation, limiting any immediate restructuring.

The episode marks a sharp reversal from earlier approvals when regulators deemed Manus non‑core tech. Beijing’s broader aim is to curb outbound talent flows and prevent Chinese firms from exiting to foreign buyers. With the probe ongoing, the deal underscores the growing friction between China’s tech ambitions and U.S. corporate appetite, and regulators warn future deals may face similar hurdles, prompting Chinese startups to rethink overseas listings.