China Blocks Meta $2 Billion AI Startup Acquisition

China has blocked Meta Platforms’ $2 billion acquisition of Manus, a Singapore-based agentic AI startup with Chinese roots, in a surprise move to unwind a controversial deal that drew criticism for technology leakage to the United States. The National Development and Reform Commission ordered the deal’s cancellation in a brief statement Monday, saying the decision was made in accordance with laws and regulations without elaborating further. Meta shares fell 0.2% in premarket trading following the announcement.

Manus began as a product of Chinese startup Butterfly Effect, also known as Monica.Im, before growing into a separate entity. The company launched its first general-purpose AI agent in March 2025, claiming superior performance to OpenAI’s Deep Research agent. Manus raised $75 million in a Series B funding round led by Silicon Valley venture firm Benchmark in April and is backed by Tencent and HongShan Capital Group, formerly known as Sequoia.

The startup relocated its headquarters from China to Singapore in June 2025 and laid off most of its Beijing staff in July as it pursued global expansion. The company claimed it achieved an annualized average revenue of more than $100 million just eight months after launch, with its revenue run rate exceeding $125 million. Meta announced the acquisition in December 2025, stating there would be no continuing Chinese ownership interests after the transaction.

The buyout triggered a Beijing probe into illegal foreign investment and tech exports shortly after its December announcement. The decision marks a significant escalation in Beijing’s oversight of strategic technology transactions, particularly those involving artificial intelligence and cross-border investment. Analysts have termed the trend of Chinese startups relocating to Singapore Singapore washing, a move made mostly to navigate geopolitical tensions and gain access to global funding, markets and advanced chips amid trade restrictions.

The abrupt halt to the Meta-Manus transaction is likely to have wider implications for future mergers and acquisitions in the AI space. For global technology firms like Meta, the development highlights the growing complexity of navigating regulatory environments amid rising geopolitical tensions between the United States and China over artificial intelligence technology.

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