Here's a twist in the world of big tech acquisitions: sometimes, the founders can't just walk away with the check. According to reports, the Chinese government has reportedly restricted the co-founders of AI startup Manus from leaving the country. Why? Because Beijing is taking a close look at the company's planned $2.5 billion sale to Meta Platforms (META).

Think of it as the regulatory equivalent of "please remain seated until the review is complete." The two co-founders, Xiao Hong and Ji Yichao, were summoned for a meeting with China's National Development and Reform Commission in Beijing earlier this month. After that chat, officials instructed the Singapore-based executives not to leave China until further notice, citing the ongoing review of the deal.

Relocation and Ownership Under the Microscope

So, what's got regulators so interested? The acquisition of Manus, which develops an advanced AI agent, has drawn scrutiny for a couple of key reasons. For one, the company had already relocated most of its China-based employees to Singapore before the deal. That move has apparently raised concerns in Beijing that other Chinese tech firms might try to follow a similar playbook—shifting operations and assets abroad—without getting the necessary approvals first.

Meta did not immediately respond to a request for comment from MarketDash.

The review is focusing on the ownership changes and the operational relocation by Beijing Butterfly Effect Technology, the company behind the early versions of Manus. Manus is run by its Singapore-based entity, Butterfly Effect, but was partly developed by its Beijing sister company, which was founded in 2022. It's a tangled corporate web that regulators are now trying to untangle.

For its part, Meta has previously assured that after the acquisition, there will be no remaining Chinese ownership interest in Manus and that the startup will cease its services and operations in China entirely.

Is This a Technology Export?

This isn't the first sign of regulatory headwinds for this deal. Back in January, it was reported that the Chinese Ministry of Commerce was assessing whether Manus' staff and technology relocation to Singapore, followed by the sale to Meta, requires an export license under Chinese law. That's a significant question. If the Chinese government views the AI technology and expertise as a strategic asset, its transfer could be subject to strict controls.

Meta's move to acquire Manus was part of its larger strategy to leverage its massive AI spending into a bigger business. The company valued the startup at more than $2 billion and moved quickly to finalize the agreement. Now, it appears the final hurdle might be convincing Chinese authorities that the deal doesn't run afoul of their rules on technology and capital flows.