China's top economic planning body on Monday ordered Meta to unwind its $2 billion acquisition of AI startup Manus, a decision that reaches across borders to block a deal already in its final stages. The National Development and Reform Commission said it "prohibits the foreign investment in the acquisition of the Manus project" and "requires the parties involved to withdraw the acquisition transaction," without naming Meta directly. The one-line notice cited compliance with laws and regulations but offered no further explanation.
What makes this block unusual: Manus is incorporated in Singapore, not China. The startup was founded by Beijing Butterfly Effect Technology in 2022 before relocating to the city-state. But China's regulators are asserting authority anyway, treating Manus as Chinese despite its foreign registration. The deal was already far along. Manus staffers had moved into Meta offices in Singapore, and investors including Tencent Holdings, ZhenFund, and Hongshan had received their proceeds, according to people familiar with the matter.
Co-founders Xiao Hong and Ji Yichao, typically based in Singapore, were summoned to a meeting in Beijing last month and told they could not leave the country while regulators reviewed the acquisition, the Financial Times reported. Both remain restricted from departing China.
Manus launched in March 2025 as a general-purpose AI agent capable of automating complex tasks: sifting resumes, building stock analysis websites, drafting sales pitches. By December it had surpassed $100 million in annualized revenue.
Meta announced its intent to buy the startup later that month, describing it as a way to "bring a leading agent to billions of people." The company's parent Butterfly Effect had raised $75 million months earlier in a round led by Silicon Valley's Benchmark at a $500 million valuation.
"The Manus block is a clarifying moment," Ke Yan, a tech analyst at DZT Research in Singapore, told Bloomberg News. The decision signals that Beijing views outbound AI acquisitions involving Chinese-founded companies as national security risks, regardless of where they're incorporated.
Chinese officials began investigating the deal for potential national security violations and export control breaches shortly after it was announced in January. The investigation concluded with Monday's block order.
Meta has not commented on Monday's decision.
