Manus was hailed by Chinese state media as the “next DeepSeek” soon after its launch in March 2025, months before the startup relocated to Singapore.Cheng Xin | Getty Images News | Getty ImagesBEIJING — China’s decision to block U.S. tech giant Meta’s $2 billion acquisition of artificial intelligence startup Manus is being seen by analysts as a warning to tech entrepreneurs.”Clearly after Manusgate, founders will know that if you start in China, you stay in China,” said Duncan Clark, an early advisor to Alibaba and chairman of consultancy firm BDA China.”We know the deal was already in trouble,” he said, “but this draconian development is on the more extreme side of the likely outcomes.”The timing is notable as it comes just days before Meta’s scheduled earnings release Wednesday local time, and less than a month before a planned visit by U.S. President Donald Trump to Beijing, during which trade and investment are expected to be discussed.The case also has direct implications for how businesses and investors position themselves in the U.S.-China tech race, as they navigate new risks around data, talent and intellectual property.For Chinese AI startups and U.S. investors, “the takeaway is that Singapore incorporation alone does not de-risk a deal from Chinese regulatory reach,” said Chris Pereira, president and CEO of consulting firm iMpact.”The broader implication,” he said, “is that a new front in the competition between the U.S. and China just opened up: talent itself.”Manus, which has Chinese roots, relocated to Singapore before Meta agreed to acquire it in December. Many other China-affiliated tech startups, including fast-fashion giant Shein, have attempted similar business structures to reduce their Chinese footprint — dubbed “Singapore washing” — as they navigate rising scrutiny of foreign tech by both Washington and Beijing.What’s next for the dealChinese authorities on Monday demanded that parties involved with the transaction withdraw, just months after launching a probe. It was not immediately clear how the unwinding process would proceed.Analysts said the decision could serve as a signal to founders about relocating sensitive technology overseas.”More than the models and AI agents, China is most concerned about whether China-origin strategically sensitive tec …
