Beijing, April 27, 2026, 19:05 CST
China ordered Meta Platforms to unwind its $2 billion-plus purchase of AI startup Manus on Monday, a rare move to reverse a completed technology deal and a sharp signal that Beijing wants tighter control over artificial intelligence talent and intellectual property leaving the country.
The timing matters. The order lands as U.S.-China competition in AI shifts beyond chips and model releases into who funds, owns and absorbs promising startups. Bloomberg reported last week that Chinese regulators had told some private tech firms, including AI startups, to reject U.S.-origin capital unless Beijing gives explicit approval.
It also tests a route used by China-born startups trying to globalize: shifting operations to Singapore or other offshore bases while still carrying technology, founders and early work rooted in China. Manus moved to Singapore, and its staff had already moved into Meta’s Singapore offices, according to people cited by Reuters.
The National Development and Reform Commission said the foreign investment security review office had made a decision to prohibit foreign investment in the Manus project and required the parties to withdraw from the acquisition. The one-line official notice did not name Meta.
Meta said the transaction “complied fully with applicable law” and that it expected “an appropriate resolution to the inquiry.” The NDRC did not give detailed reasons for the ban, the Associated Press reported. AP News
Meta announced the Manus deal in December as it pushed deeper into AI agents, software that can carry out multi-step work such as research, planning or automation with less human prompting than a standard chatbot. Manus, founded in Beijing and later based in Singapore, was seen as a way for Meta to add agent technology across Facebook, Instagram, WhatsApp and its broader AI products.
That is why the reversal cuts beyond one acquisition. Meta has been trying to close the gap with rivals including Google, OpenAI and Anthropic in AI agents, a field many tech groups see as the next layer after chatbots. Bloomberg’s report, republished by Business Standard, said Manus was meant to help Meta leap further into that market.
The deal had drawn scrutiny almost from the start. China’s commerce ministry said earlier this month that companies involved in outward investment, technology exports, data transfers and cross-border acquisitions must comply with Chinese laws.
Reuters reported that Manus received a $75 million fundraising round led by Benchmark in May 2025, then shut its China offices in July and moved operations to Singapore without seeking Chinese regulatory approval, according to people familiar with the matter. That structure allowed its parent, Butterfly Effect, to reincorporate in Singapore, Reuters reported.
The pressure on the company had been building. Manus CEO Xiao Hong and chief scientist Ji Yichao were summoned to Beijing in March and later barred from leaving China while regulators reviewed the transaction, Reuters reported at the time, citing the Financial Times.
Ben Chester Cheong, a lecturer at the Singapore University of Social Sciences, told Reuters the decision did not end Chinese companies’ moves to Singapore, but it “raises the compliance threshold.” He said firms may now need to prove where management, intellectual property, research and data are really located. Reuters
Alfredo Montufar-Helu, managing director at Ankura China Advisors, said AI has become central to strategic competition between the world’s two largest economies. His read: China is making clear that AI assets can fall under national-security control, even when a company has tried to move offshore.
The risk is that the order may be hard to execute cleanly. Bloomberg reported that Manus employees had joined Meta, capital had been transferred and exiting investors had received proceeds, leaving open how an unwind would work in practice.
For Meta, the immediate downside is delay or loss of a deal meant to strengthen its AI-agent push. For Chinese startups, the message is broader and colder: moving headquarters may not be enough if Beijing still sees the technology, founders or capital path as Chinese.
