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China blocks Meta’s $2 billion Manus acquisition over AI security concerns
Beijing’s move expands scrutiny over cross border AI deals involving Chinese talent, technology, and intellectual property.
China has ordered Meta to unwind its more than $2 billion acquisition of AI startup Manus, escalating Beijing’s scrutiny of US investment in Chinese linked frontier technology companies.
The National Development and Reform Commission said its foreign investment security review office would prohibit foreign investment in Manus and require the parties involved to withdraw the acquisition transaction. The order did not name Meta directly, but Reuters reported that the move targets Meta’s completed purchase of the AI agent startup.
The decision marks a rare attempt by Beijing to reverse a completed cross border technology deal involving a company that had shifted its operations outside China. Manus shut its China offices in July after a $75 million Benchmark led funding round in May 2025, laid off dozens of employees, and moved operations to Singapore through parent company Butterfly Effect.
Meta acquired Manus to strengthen its AI agent ambitions, a fast growing area focused on tools that can complete complex tasks with limited human input. Manus develops general purpose AI agents capable of tasks such as app development, market research, and financial planning.
Beijing’s intervention suggests Chinese regulators are no longer looking only at where a target company is incorporated. Reuters cited legal analysts who said China may review the origin of the technology, the location of research and development, the nationality of founding teams, prior China operations, data flows, and offshore restructuring when judging sensitive technology transactions.
The move also targets a practice sometimes described as Singapore washing, where Chinese linked startups move operations to Singapore to access foreign capital and reduce regulatory exposure.
Analysts quoted by Reuters said the Manus case raises the compliance threshold for startups in sensitive sectors, especially if their intellectual property, data, research teams, or founding history remain tied to China.
Meta said the transaction complied fully with applicable law and that it expected an appropriate resolution to the inquiry. The case comes weeks before a planned mid May summit between President Donald Trump and Chinese President Xi Jinping in Beijing, placing the deal directly inside the broader US China contest over artificial intelligence, chips, data, and strategic technology control.