China has decided to block Meta Platforms Inc.'s US$2 billion acquisition of agentic AI startup Manus, a surprise move to unwind a controversial deal that has drawn fire for the leakage of technology to the United States. The National Development and Reform Commission (NDRC) ordered the deal's cancellation in a brief statement Monday, citing laws and regulations prohibiting foreign investment in the startup.
Background of the Deal
Manus was supposed to help Meta leapfrog into a leading position in the hot sphere of AI agents, or services that use artificial intelligence to execute tasks. The startup's founders got their start in China but relocated their headquarters and key staff to Singapore in 2025. The deal, announced in December, was initially hailed as a template for startups with global aspirations, but domestic critics have since lamented the loss of valuable technology to a geopolitical rival.
Regulatory Tightening
Beijing has tightened scrutiny of key industry firms in the wake of the deal, which has largely been completed. The ruling is likely to send a chill through China's burgeoning AI sector and emerged weeks before a high-profile summit between U.S. President Donald Trump and China's Xi Jinping. Beijing's regulators have wielded outsized power for years, forcing top executives at companies like Alibaba Group Holding Ltd. and Tencent Holdings Ltd. to reform their business practices with little resistance.
Impact on Meta
The decree on Manus may deal a setback to Meta as it looks to compete in AI against rivals from Microsoft Corp. and Alphabet Inc.'s Google to OpenAI and Anthropic PBC. Meta said in a statement that the deal complied with applicable laws and it expected a resolution to China's investigation, without elaborating. The company's shares slid less than one percent in premarket trading.
Unwinding Challenges
It is unclear how Meta would unwind the deal. Manus employees have joined Meta, capital has been transferred, and the startup's executives have joined the U.S. firm's rapidly expanding AI team. Manus staffers have already moved into Meta offices in Singapore, while investors including Tencent Holdings Ltd., ZhenFund, and Hongshan have received their proceeds, according to people familiar with the matter.
Broader Implications
Perhaps the closest parallel to the Manus move was Beijing's decision to compel its leading ride-hailing player, Didi Global Inc., to delist from the New York Stock Exchange shortly after its initial public offering in 2021. Once hailed as the Uber of China, the Beijing-based company has not been able to relist since and has a market valuation of about US$17 billion.
The Manus block is a clarifying moment, according to Ke Yan, a tech analyst with DZT Research based in Singapore. He noted that Manus was Singapore-incorporated with founders based there, and it still got pulled back, signaling that what matters is not where the legal entity sits but Beijing's authority over technology transfers.
