Regulators had reviewed whether deal violated Beijing’s investment rules.
China has blocked Meta’s* $2bn acquisition of artificial intelligence app Manus, as Washington and Beijing vie for dominance over the emerging technology.
The decision by Beijing comes ahead of an expected summit next month between US President Donald Trump and his Chinese counterpart Xi Jinping, when they will try to reach agreement to ease longstanding tensions over trade.
Chinese regulators began investigating in January whether the acquisition of the Singapore-based AI start-up by Silicon Valley-based Meta violated Beijing’s investment rules.
China’s top economic planning agency said in a statement on Monday that it had told the parties involved to unwind the acquisition.
The powerful National Development and Reform Commission (NDRC) said it would prohibit “foreign investment” in Manus and in accordance with the law has “required the relevant parties to cancel the acquisition transaction”.
To undo the deal at this stage, Meta could have to spin off its acquisition to a new buyer, sell it back to its former investors or find new backers.
Any such process would be complex, as Meta has already integrated Manus into some of its tools, the FT has reported.
A person briefed on the thinking behind the NDRC statement said the gesture was “pretty harsh and it carries a strong intention to stop follow-on deals [like Manus]. In reality, it’s hard to unwind a done deal, so it is more about verbal warnings on similar deals and the leveraging building before the Xi-Trump summit.”
The original creator of Manus, AI start-up Butterfly Effect, was founded in China in 2022. Last year, Butterfly Effect moved its headquarters and core team to Singapore following a funding round led by top US venture capital firm Benchmark Capital.
Within months, Meta swooped in to buy the AI app, as part of the parent of Instagram and WhatsApp’s costly efforts to catch up with OpenAI and Google in AI. The $2bn deal was announced in December and closed earlier this year.
The current listing for what is described as “Manus from Meta” on Apple’s App Store still describes Butterfly Effect’s Singaporean entity as the software’s developer.
Multiple Chinese regulators have reviewed the transaction, including the NDRC, the commerce ministry and China’s antitrust watchdog, the FT reported this month.
Beijing earlier branded the acquisition a “conspiratorial” attempt to hollow out the country’s technology base.
Officials had been examining the deal using a range of tools, from export control rules to foreign investment and competition laws, the people said.
In March, Beijing restricted two co-founders of Manus from leaving the country as the deal was reviewed.
Meta did not immediately respond to a request for comment. The US tech group has previously said the transaction complied fully with applicable law and said it anticipated an appropriate resolution to Beijing’s inquiries.
Manus describes itself as an “action engine” that can “extend your human reach”. It launched in March 2025, just two months after DeepSeek’s debut of a powerful open-source model capable of “reasoning” sparked a panic among US tech investors about Chinese AI advances.
The Manus app was an early forerunner of OpenClaw, which has taken both Silicon Valley and China by storm this year.
Both tools allow users to build and run personal AI “agents” that are capable of managing files or creating software on a desktop computer, going beyond the likes of OpenAI’s ChatGPT that largely focuses on processing information and answering questions.
The Manus acquisition represents the second major deal in which Beijing has intervened, following the sale by CK Hutchison of 43 global ports, originally including two in Panama, to a BlackRock-backed consortium. In that case, authorities pushed for the acquiring party to include a Chinese group as well, although that deal has not yet closed.
*banned and designated as extremist in Russia
Source: Financial Times
