BEIJING – China has decided to block Meta Platforms’ US$2 billion (S$2.5 billion) acquisition of agentic AI start-up Manus, making a surprise move to unwind a controversial deal that has drawn fire for the leakage of technology to the US.
The Chinese National Development and Reform Commission ordered the deal’s cancellation in a brief statement on April 27.
The decision was made in accordance with laws and regulations, the powerful state planner said in a one-line notice, without elaborating.
Meta representatives did not immediately respond to requests for comment.
The decision is likely to send a chill through China’s burgeoning artificial intelligence sector, and emerged mere weeks before a high-profile summit between US President Donald Trump and China’s President Xi Jinping.
Beijing has tightened scrutiny of key AI companies in the wake of the deal, which has been largely completed. Initially hailed as a template for start-ups with global aspirations, critics have since lamented the loss of valuable technology to a geopolitical rival.
Beijing’s agencies have since moved to discourage a repeat of the Manus manoeuvre, which was completed with unusual speed.
The buyout triggered a Beijing probe into illegal foreign investment and tech exports shortly after its December announcement.
The decision may deal a setback to Meta as it looks to compete in AI against rivals from Microsoft and Alphabet’s Google to OpenAI and Anthropic.
Manus was supposed to help Meta – which had been playing catch-up – leapfrog into a leading position in the hot sphere of AI agents, or services that use AI to execute tasks.
Still, it is unclear how Meta would unwind the deal.
Manus employees have joined Meta, capital has been transferred and the start-up’s executives have joined the US company’s rapidly expanding AI team. Manus employees have already moved into Meta offices in Singapore, while exiting investors including Tencent Holdings, ZhenFund and Hongshan have received their proceeds, according to people familiar with the matter. The people spoke on condition of anonymity to discuss a private transaction.
Agencies including the Chinese National Development and Reform Commission have told key AI companies including Moonshot AI and StepFun in recent weeks they should reject capital of US origin in funding rounds unless explicitly approved, Bloomberg News reported last week.
Regulators have also decided on similar restrictions for ByteDance, the owner of TikTok and the most valuable start-up in the country.
Those restrictions risk further isolating China’s recovering tech sector from the venture backing that has underpinned it for two decades, much of which was sourced from American pensions and endowments.
It follows Beijing’s decision to restrict “red chips” – a type of Chinese company incorporated overseas – from seeking initial public offerings in Hong Kong, threatening to upend a decades-old playbook that helped Chinese companies tap foreign capital by floating overseas.
The overarching intent of the restrictions is to prevent US investors from taking stakes in sensitive sectors where national security is a priority.
The twin moves suggest that regulators are worried about a leakage of homegrown technology abroad as Chinese-founded start-ups and companies explore international opportunities.
In the wake of the Manus acquisition, many academics decried the loss of a valuable asset to the US. Many worried that the deal would encourage other start-ups to follow suit.
Manus was a Singaporean-incorporated company, but its founders hailed from China. Launched in March 2025, Manus is a general AI agent capable of automating complex tasks, ranging from S&P 500 analysis to drafting sales pitches.
A month later, its parent Butterfly Effect raised US$75 million in a round led by Silicon Valley’s Benchmark, valuing it at US$500 million. The investment triggered a probe by the US Treasury over potential violations of restrictions on investments in sensitive technologies.
In July, Manus relocated its China-based staff to Singapore, cutting dozens of roles in the process. Meta announced its acquisition in December after Manus surpassed US$100 million in annualised revenue.
It remains unclear what other action Beijing will take following its investigation.
Manus co-founders Xiao Hong and Ji Yichao had been barred from leaving China, the Financial Times reported in March. BLOOMBERG