China Blocks $2B Meta's Acquisition of Manus. It's Getting Real

Speaker1: At the end of last year, Meta announced a $2 billion acquisition of an AI startup called Manus. Speaker1: They make AI agents very similar to OpenCore, but they were founded in China. Speaker1: Then in March recently, the two founders visited China on business and were Speaker1: told that they couldn't leave the country. Speaker1: Their passports were taken away from them and they were blacklisted from travel.

Speaker1: Then today, China revealed that they have completely banned the acquisition Speaker1: deal by Meta and have requested that Meta reverse the entire deal. Speaker1: Now, this is unprecedented from China. For the last 20 years, Speaker1: they've happily accepted US capital, but this marks the turning point after Speaker1: three years where China has built their own independent AI stack and they don't Speaker1: need to rely on America anymore.

Speaker0: Yeah, those two people from that meeting last month, that was the CEO and the Speaker0: chief scientist of Manus. Speaker0: They got a summons from the Chinese Speaker0: government body called the National Development and Reform Commission. Speaker0: Basically, it's the agency that runs the country's economy. They go to the meeting, Speaker0: they get questioned about the meta deal, and then they say, you are not allowed Speaker0: to leave. Now, fast forward to today.

Speaker0: Four weeks, I will say, before Donald Trump was supposed to land in Beijing Speaker0: to meet with Xi Jinping, China killed the deal. And they did so in one sentence. Speaker0: They said, just undo it. The two men still can't leave.

Speaker0: So now, not only are the two people stuck in China, but the deal...

Speaker0: Meta has signed with manis is now Speaker0: kind of in a weird gray area now for those Speaker0: who aren't familiar with manis manis is meta's response Speaker0: to open claw open claw is the claw it is the agentic system Speaker0: that kind of runs your life for you it performs agentic tasks long form it has Speaker0: context does memory it was a big deal for meta and now meta has this problem Speaker0: on their hands where china is saying no when the reality is is there's already

Speaker0: an entire singaporean office set up and the ceo of manis is on the C-suite of Meta already. Speaker0: So there's a lot to unpack here. There's a lot to unwind. The tension between Speaker0: China and the United States has never been higher. Speaker0: I mean, this is pretty unprecedented as it relates to the dynamics between these two countries. Speaker1: Yeah, this all started around the time last year that Zuck started acquiring Speaker1: or started doing his spending.

Speaker1: I think he spent in total around $25 billion, $15 billion, which was spent on just one single man. Speaker1: But Manus was part of the spending spree. And the timeline on this is pretty Speaker1: insane. I've got it pulled up here. Speaker1: So in March in 2025, Manus launched their AI agent, right? And it's what you Speaker1: just mentioned. It's like its own AI operating system.

Speaker1: And within like 24 hours or within seven days, rather, they had 2 million people on the waiting list. Speaker1: And people were like, I remember this, reselling invite codes for like $1,500. Speaker0: $1,000 is crazy. Speaker1: I actually tried to acquire one because this is before AI agents existed. Speaker1: This is before GPT and Claude had built their own agentic systems. Manus was the first.

Speaker1: So the founders, with all the success, was like, oh, we've got to kind of kill Speaker1: the Chinese image so that Americans will use our product. Speaker1: So they ended up moving from Beijing, where they were based, Speaker1: to Singapore, and they raised a massive round from Benchmark Capital, Speaker1: which is one of the biggest funds in America, I think it was like $70 million. Speaker1: And within six months from then, they hit $90 million of revenue run rate.

Speaker1: So things are looking amazing. And they thought that they'd subverted Chinese Speaker1: authority simply by moving their company to Singapore, which is obviously not in China. Speaker1: Then in March 2026, China stops the Manus co-founders from leaving the country. Speaker1: And today, they've blocked the entire acquisition. Now, the main question that Speaker1: pops into my head, Josh, and I don't know if you're able to like answer this for me is,

Speaker1: are they able to actually do this? I thought the deal was already signed. Speaker1: I thought the ink had already dried. Speaker1: Like I'm kind of confused how they unwind a deal that's already been dealt. Speaker0: I think this is where there's going to be a problem, right? Speaker0: It's because like, like we mentioned, there is an entire Singaporean office Speaker0: where there's over 100 workers who are from Manus working with Meta.

Speaker0: The CEO of Manus is on the C-suite in Meta.

Speaker0: There's a lot of already kind of like baked in progress that has been made after this deal. Speaker0: And China pulling the cord creates a lot of tension. And I'm not sure where Speaker0: this is going to land because does Meta want to actually go to war with China Speaker0: to prevent this blockage from happening? Speaker0: Maybe. This is a huge bet for the company and a big bet on the future of the Speaker0: company, what this looks like.

Speaker0: They were starting to roll this out. It was very deeply integrated. It fell apart. Speaker0: I don't know what's going to happen. This is actually a pretty insane story. Speaker1: Okay. So there are like some crazy parts of this on both sides, Speaker1: right? So for Meta, you've spent $2 billion. Speaker1: You have hundreds of employees from Manus that now are under Zuck's employment. Speaker1: Just to be very clear, it's like under the American company.

Speaker1: Inc has been sealed. The deal has been done. Speaker1: Now, to your point, Manus is being used a lot in Meta. Speaker1: But specifically, if you haven't used it as a user, it's being used by advertisers. Speaker1: We spoke about this on a previous episode, I think like two weeks ago, Speaker1: where Manus is being used by advertisers to spin up their advertising projects.

Speaker1: And it's actually resulted in a 30% quarterly jump in revenue alone, Speaker1: just by people using Matters. Speaker1: It's cut out a lot of repetitious manual tasks. So it's a very good product. Speaker1: And just because you haven't used it doesn't mean it isn't valuable to Meta. Speaker1: They're building it, it's implemented, it's core to their system. Speaker1: Advertising is like a lot of Meta's revenue.

Speaker1: So now they theoretically have to unwind this. But I think the alarm bell that's Speaker1: ringing for me, Josh, is China's never done this before. Speaker1: They have never unwound a closed deal.

Speaker1: Let me repeat that again. They've never unwound a closed deal that they have Speaker1: like signed off on that is all completely legal, which tells me that they are Speaker1: now treating these AI assets, whether you want to call them workers, researchers, Speaker1: The actual product itself as a kind of national asset. Speaker1: And they're treating it as kind of like a geopolitical asset against the US.

Speaker1: They feel like if they don't own this thing, then the US is going to wipe them out. Speaker1: So I started looking at like other parts or trends And I realized China's kind Speaker1: of been like moving in this direction over the last couple of months. Speaker1: Specifically, they've like refused to use NVIDIA's GPUs to train their own AI Speaker1: models amongst the top Chinese AI labs.

Speaker1: And they've started mandating that all these Chinese labs start building and Speaker1: using the AI models within the China itself and not really open sourcing or Speaker1: open sourcing only parts of it, but not the research itself to the US. Speaker1: So there's been this cultural shift where China now doesn't really depend on the U.S. Speaker1: As they had before in the past or over the last six months.

Speaker1: They now kind of have their own independence stack. And I think that's probably Speaker1: part of what is playing into this story today. Speaker0: Yeah, man, I kind of feel so bad for Zuck because he's tried this over and over Speaker0: to get this agentic system. Speaker0: He first tried to buy Ilya's safe superintelligence, if you remember, and Ilya said no. Speaker0: And then he went to another OpenAI co-founder. He went to Mira Mirati's Thinking machines.

Speaker0: She gave him a no. He reached out to perplexity. They gave him a no. Speaker0: And then they wound up paying $15 billion for half of scale AI just to get Alexander Wang. Speaker0: So they really were struggling to get some help in this agentic world. Speaker0: They finally acquired it through Manus, and now they're having this huge problem. Speaker0: And an important caveat that's probably worth mentioning is...

Speaker0: That it's a little disingenuous and I could see why China's upset. Speaker0: Because, I mean, Manus started off in Beijing, then they transferred over to Speaker0: Hong Kong, and then they transferred over to Singapore. Speaker0: And this is because, I mean, American venture capitalists are not going to invest Speaker0: in Chinese companies and China does not want to engage with American acquisitions. Speaker0: So they moved to a neutral place.

Speaker0: When they did this, I think 80 Chinese employees were laid off. Speaker0: All of the Weibo posts were deleted. Speaker0: All of the new offices were opened up. Everything was a clean slate. Speaker0: So the people who helped them get there, they were cut off. Speaker0: They started fresh in Singapore. But now China's like, wait a second. No, no, no, no, no. Speaker0: You started here. You are Chinese. You're coming back to us.

Speaker0: And what a disaster for Zuck. This poor company, they can't figure it out. Speaker0: They're spending so much money. Speaker0: They haven't been able to launch a good product. And they finally got Manus, Speaker0: like you mentioned, who was selling these invites for thousands of dollars because it was that good. Speaker0: And now it's ripped out from their hands. So really brutal turn of events. Speaker0: And it's going to be fascinating to follow Meta and see how they react to this.

Speaker1: Yeah, I think that the playbook that Manus founders tried to pull off, Speaker1: but failed at was, oh, yeah, if we just wipe ourselves or rather the premise Speaker1: of the actual company HQ to another country, we can evade Chinese law. Speaker1: But remember, China is more of a dictatorship in this sense. Speaker1: And they were like, hey, you can't actually do this. So we can pull your passports

Speaker1: and unwind this entire deal because it is still effectively Chinese. It was founded in China. Speaker1: Now, I just want to comment on China's AI strategy in general, Speaker1: because I think it plays very well into this particular story today. Speaker1: Manus doesn't actually own any AI models. Speaker1: I don't know if you guys knew that or the people listening to this knew that, Speaker1: but they're kind of like a wrapper over a bunch of different AI models.

Speaker1: And typically, the AI models that they would use are American AI models, right? Speaker1: But since, well, actually, over the last seven days, China released three AI models. Speaker1: I think it was DeepSeek V4, Kimi K2.6. I'm just retesting my a model knowledge here now, a Qen 3.6. Speaker1: And people have heard about Chinese models all along, right? Speaker1: They're like, oh, it's open source, but it's never as good.

Speaker1: These three models are at parity, if not as good, as Claude Opus 4.7 and GPT 5.4. Speaker1: So pretty much 90% of Frontier model capability or 95% of Frontier model capability Speaker1: you could now access for free. Speaker1: 100% open source, download, run it on your own devices or GPUs if you happen Speaker1: to have a couple laying at home for whatever reason.

Speaker1: And they're all Chinese models. Chinese models are actually also being used Speaker1: in a bunch of Silicon Valley startups who can't afford to kind of run and fine Speaker1: tune their own models, which of course, Claude and GPT are close source. Speaker1: So they can't actually do that. Speaker1: And it takes hundreds of millions of dollars to train your own model. Speaker1: So the point is, Chinese models are more accessible and more easily fine tuned.

Speaker1: So why wouldn't you use it if you could just access maybe 95% of frontier capability? Speaker1: And a large reason for this is because China has started forcing their AI labs Speaker1: to train on Chinese-made chips. Speaker1: Now, I just want to spend a very quick moment to explain this. DeepSeek, Moonshot, Speaker1: And Alibaba have been mandated by the Chinese authorities to not train their Speaker1: AI models on NVIDIA chips.

Speaker1: Now, typically, America had banned China from buying the chips. Speaker1: That got reverted, and America was like, cool, you can have these chips. Speaker1: China said, nah, we're good. We're going to train our own chips to be better Speaker1: so that we aren't reliant on America at all. Speaker1: And it seems that Huawei specifically has caught up. Speaker1: That's what all these latest models that I just mentioned are trained on and

Speaker1: are inferenced on. And now it seems like that gap has closed. Speaker1: So it doesn't really matter. Speaker1: This is worrying, from my perspective, at least, because America could keep tabs on China. Speaker1: And now they're kind of given the opportunity to leapfrog us. Speaker1: They have a heck ton more energy. Speaker1: So this is like the alarm bells ringing from today's story. Like Manus isn't Speaker1: just about like one startup. It's about China's entire strategy.

Speaker0: Yeah. And I mean, everyone knows the name DeepSeek now. DeepSeek was the ones Speaker0: that released that paper early on, they kind of changed the game as it comes Speaker0: to, I guess, like reasoning and AI models, where OpenAI kind of figured it out, Speaker0: but DeepSeek realized it and then published it publicly and then everyone followed on. Speaker0: DeepSeek has always been the frontier of this open source race.

Speaker0: And just on Friday, DeepSeek released V4, which is kind of a scary benchmark Speaker0: relative to the other open source models.

Speaker0: I mean, I'm looking at the chart here and it actually performs better on a few Speaker0: benchmarks than GPT 5.5, Speaker0: which is OpenAI's brand new frontier model that just came Speaker0: out last week and i mean just last week alone china Speaker0: dropped three huge models we got deep cv4 which is Speaker0: probably the flagship but then there was that new quen model the new kimmy model Speaker0: they're publishing at a much faster cadence and you have to imagine that part

Speaker0: of this comes from just their their boldness and willing to distill the larger Speaker0: models from the united states but also their capabilities to train these at Speaker0: an increasing rate i mean they're clearly innovating on the software side but something's working on, Speaker0: at this cadence with this type of power. Speaker1: On that note, Gavin Baker put out an amazing analysis.

Speaker1: Did you watch the Duakesh episode where he's like grilling Jensen and Jensen Speaker1: just says like, I'm not a loser, like NVIDIA is not this, right? Speaker1: So Gavin Baker commented on this and he said, actually, Jensen makes a really Speaker1: good point where the chips that NVIDIA builds are specifically built with the Speaker1: understanding that the U.S. Speaker1: Has a very limited amount of energy.

Speaker1: That's number one. Number two, that a lot of these chips are gonna be based Speaker1: on pre-training, which is like the part that comes, I guess, Speaker1: before post-training, obviously. Speaker1: But the point is, it's like a large training run, right? It's the bulk of the expense.

Speaker1: Now, China took a different approach. They said, well, we're not energy-constrained. Speaker1: We have 3X more energy than the U.S. Speaker1: And also, we think that building the best AI model happens after pre-training, Speaker1: so in the post-training thing. Speaker1: Now, one thing that Dario Amode of Anthropic and Sam Altman of OpenAI have announced Speaker1: with their latest models, including Claude Mythos, is inference has been the Speaker1: key to unlock a smarter model.

Speaker1: So they're confirming what the Chinese has also confirmed. Speaker1: And so the reason why Chinese chips specifically are doing so well is because Speaker1: they're designed around inference. Speaker1: So the architecture for a Chinese chip, if you were to try and train like a Speaker1: US model, looks very different. Speaker1: And it actually wouldn't work. The hardware actually kind of delineates at this point.

Speaker1: So China, although it seems like we're competing, is building their own kind Speaker1: of like stack themselves that wouldn't necessarily operate or work in the US. Speaker1: And I think that's a story that most people like aren't addressing at this point.

Speaker1: And we're giving China the freedom to go do that right now. Speaker0: Yeah, that perhaps talks to like the increased velocity, right, Speaker0: that they've been having is because they're not spending that much time on pre-training. Speaker0: They're all in on inference, all in on distillation.

Speaker0: And we've kind of seen this, I guess, Speaker0: A way that you could track this back to something that we've seen is how something Speaker0: like GPT 5.7 Nano will actually be far more superior than the following model, Speaker0: even though it's cheaper and smaller.

Speaker0: And it's because it takes advantage of this distillation. And we see this all Speaker0: the time where with Nano Banana, Google's image generation model, Speaker0: Nano Banana Nano, like the small one, was actually better than the pro one, Speaker0: even though it had much less model weights. Speaker0: And I think what we're seeing here is a lot of innovation on that inference Speaker0: side, on just like a faster compute.

Speaker0: And Google's been addressing this recently. They split their most recent TPU Speaker0: into two, one just for pre-training, one for inference. Speaker0: It's clear that China is very much over-indexing on inference. Speaker0: And right now, that's where a lot of the gains are happening. Speaker1: I just wanted to pull up this post because you just reminded me of something. Speaker1: For those of you who say like no one uses Chinese models, the answer is just you're wrong.

Speaker1: So Kimi K 2.6, which was released last week, and it was actually the first model Speaker1: of the three models that we mentioned, DeepSeek v4 was the last one, Speaker1: Is now the number one most used model on OpenWriter. Speaker1: OpenWriter is this website where you can basically get access to all the models Speaker1: sometimes before they actually officially release, and it can track token usage.

Speaker1: Now, token usage is the metric that you can kind of track to figure out Speaker1: which model actually is worth its weight in gold and what are people using it for? Speaker1: OpenRapta reveals that Chinese models take the number one spot almost the entire time. Speaker1: And part of that is probably because a lot of the closed-source models don't Speaker1: want to reveal their full metrics. Speaker1: But the point being is the token usage of Chinese models have now surpassed U.S.

Speaker1: Token consumption, at least from publicly available data. Speaker1: So the data would then indicate that these Chinese models are obviously getting Speaker1: not only better, but more accessible to any and all developers that want to Speaker1: use it. It's not just enterprises that use it. Speaker1: It is just open source developers or just developers that can't afford to train Speaker1: or pre-train their own models.

Speaker1: So the Chinese models are way more powerful at this point. They've almost caught Speaker1: up to parity with the US models. Speaker1: I think this probably suggests, if I had to guess, that the next couple of iterations Speaker1: of Chinese models will probably end up leapfrogging some of the US ones. Speaker1: This is just a guess from my end. And so it'll probably switch to becoming closed

Speaker1: source. I can't see China wanting to open source these things or continue to Speaker1: open source these models if they're doing things like unwinding Manus deals Speaker1: and trying to keep the assets on mainland China. Speaker0: Well, you know who's probably happy about these open source models doing well? Speaker0: And I'm like, this is a sneaky one, but probably Jensen.

Speaker0: And after I watched that interview that he had with Dorkesh, Speaker0: I think one thing that became clear to me is that open source models benefit Speaker0: NVIDIA more than anybody else. Speaker0: And I think that's why NVIDIA has really been leaning in heavily to be the leader Speaker0: in the United States, at least in terms of open source AI, Speaker0: because it requires the world to train on an open hardware stack, Speaker0: right? If everyone is...

Speaker0: Creating these models and they're publishing the weights, you can train them on NVIDIA GPUs. Speaker0: Closed source models, like someone like Anthropic or OpenAI, Speaker0: who we're seeing really heavily sway towards moving to TPUs or accelerators Speaker0: that are not made by NVIDIA, they have the ability to build this whole custom Speaker0: stack built on hardware that isn't NVIDIA's. Speaker0: And that seems to be like a real threat to the NVIDIA platform.

Speaker0: So when Jensen got a little bit heated on the podcast, I have a, Speaker0: Open source really benefits them. It makes everyone want to use NVIDIA chips. Speaker0: The second these closed source models win, and if everything becomes closed Speaker0: source, there's a strong bias towards these closed loop kind of hardware stacks Speaker0: that NVIDIA is no longer in the loop on. Speaker0: And that could create a little bit of an issue for the company.

Speaker1: Yeah, I think you hit the nail on the head. In this interview, Speaker1: actually, for those of you who haven't watched it, definitely go watch it. Speaker1: Jensen says, or was asked, hey, you dominate on GPUs. Why don't you move up Speaker1: the stackers and dominate there as well. Speaker1: You obviously know so much about how this is going to play out. Speaker1: And he answers very simply, I am so hyper-focused on GPUs and the hardware architecture,

Speaker1: and this is the game I want to play, dominate, and own, right? That was his response. Speaker1: So he's hyper-focused on winning GPU architectures and selling the picks and Speaker1: shovels for this entire race. Speaker1: NVIDIA also announced Nemo Claw, which is their enterprise version of Open Claw. Speaker1: Now, you might be asking, okay, why is NVIDIA launching that? Speaker1: Why are they launching a bunch of open source models, which seemingly like no one is using?

Speaker1: It's to your point, he wants to push adoption of AI in general, Speaker1: whatever is built on top of his NVIDIA GPUs will demand more NVIDIA GPUs in Speaker1: the future. And that's how he's going to make this money. Speaker1: And guess what happened at the end of last week, NVIDIA once again surpassed Speaker1: a $5 trillion market cap, they went above, then they went below. Speaker1: And now they're sitting pretty above it. So his plan is paying off.

Speaker1: He couldn't explicitly say clearly on the podcast that I'm going to make a lot Speaker1: of money if I sell GPUs to China. Speaker1: Obviously, he can't say that. It's in poor taste. It would go against the philosophical Speaker1: argument that he was making. But that is the truth, ultimately. Speaker0: Yeah. So the Game of Thrones is getting a little weird now because now we're Speaker0: seeing direct combat in a way between China and the United States.

Speaker0: We're seeing a lot of that happen just domestically across these companies. Speaker0: It is getting higher and higher stakes. Speaker0: And you could see as the stakes get higher, people get a little more emotionally Speaker0: charged. People make larger decisions. Speaker0: And China pulling the rug on this deal sets a pretty crazy precedent. Speaker0: I mean, this has never happened before where they've actually interfered with Speaker0: something on a material scale.

Speaker0: $2 billion is a lot of money. and it's been months that Speaker0: they have been integrating madness into the platform now meta Speaker0: if they do decide to actually unwind this deal is kind Speaker0: of sitting in a little bit of an uncomfortable position because Speaker0: they still haven't released their product and they now Speaker0: don't have a clear path to getting a claw-like operating Speaker0: system for their software that has all this

Speaker0: rich data about all its users so we'll be following the story closely Speaker0: we'll be following the china story closely we will be testing out Speaker0: all these models including deep seek v4 which i haven't had a chance to play Speaker0: around with but seems like it's pretty powerful and i think that's probably Speaker0: the update for for china right now it's just kind of wait and see like we have

Speaker0: this news that came out we're going to see how meta responds we'll see how china Speaker0: responds and if they're actually willing to unwind this deal for the sake of Speaker0: doing what the chinese government wants. Speaker1: Yeah, can we get a response from Meta, please? It's been like 12 hours since this announcement. Speaker1: And I'm on the Manus website right now. It says Manus is now a part of Meta. Speaker1: So they haven't updated it yet.

Speaker1: They've probably got a ton of lawyers putting together a response. Speaker1: But if you're listening to this from Meta and you want to give us Undisclosed Speaker1: information via an anonymous tip, our DMs are open. Feel free to reach out. Speaker1: But it'll be sad to see something like this go. I think OpenCore started a movement. Speaker1: Manus is probably number two. Maybe Anthropics called Cowork is number two as well.

Speaker1: But it is a good enough product and it gave Meta the upper hand. Speaker1: They were actually making money from this thing. So it's sad to see it happen. Speaker0: I have a question for you, EJS. So Trump is going to China in like two or three Speaker0: weeks to meet with Xi Jinping. Speaker0: So how important of a topic do you think this is? Like, is this something that Speaker0: would be raised to that level?

Speaker0: Is Trump going to discuss this with Xi Jinping to try to work out a deal? Speaker0: Like, is AI and meta that important that this acquisition go through? Speaker0: I think that's going to be an interesting thing to follow too. Speaker0: Like, does this become a topic on the debate table between the two of them? Speaker1: Okay. So I don't have a tinfoil hat, but I'm putting it on, right? Speaker1: To answer this question. Okay, cool.

Speaker1: I think China is going to use this as a bargaining chip, pun intended, Speaker1: to get access to bleeding edge NVIDIA GPUs. Speaker1: I think this is a chess move, right? Speaker1: Because right now, NVIDIA is selling them GPUs, but they're like the old ones. Speaker1: They're the ones like in the warehouse share, the discarded items, right?

Speaker1: They want to like keep China on a leash. I think Xi Jinping is going to go to Speaker1: Trump and say, hey, listen, we can do this ourselves, but we're willing to pay Speaker1: for your GPUs as long as you give us access to the best one. no frills. Speaker1: And I think he's going to use this as a bargaining chip. Otherwise, Speaker1: we're not going to take any more investment from America. Yeah. Speaker0: That could be. It's going to be an interesting dynamic. We'll see.

Speaker0: I love that this has elevated to the global stage. Speaker0: This is now the single hottest topic in the world. So we will be here to follow Speaker0: it as always. Thank you guys so much for watching this episode.

Speaker0: I hope you enjoyed. We had an episode that just released yesterday talking to Speaker0: the founder of USVC, an interview, a rare interview with the general partner Speaker0: from this fund that gives you access to Anthropix, SpaceX, Speaker0: OpenAI, a lot of the large stocks that you would want to be investing in pre-IPO. Speaker0: That was pretty interesting. Speaker0: And then we'll have a whole bunch of new episodes coming out this week.

Speaker0: So if you enjoyed, please don't forget to share with your friends, Speaker0: like, comment, leave a message, give us a five-star review, whatever you want to do. Speaker0: But as always, thank you guys so much for watching and we will see you guys in the next one. Speaker1: See you guys.