China blocks Meta’s $2B AI startup acquisition, orders unwind of Manus deal

China just drew a hard line in the sand for global AI deals. On Monday, the country’s top economic planner ordered Meta to unwind its $2 billion acquisition of Manus, a fast-rising AI startup with Chinese roots. The directive effectively shuts down one of the more closely watched cross-border AI transactions in recent months.

In a brief statement, China’s National Development and Reform Commission said the deal must be withdrawn in line with existing laws and regulations governing foreign investment. The agency offered no further details, but the message was clear: the transaction will not go through.

Markets barely reacted. Meta shares slipped 0.2% in premarket trading. Behind the scenes, the implications are far larger, CNBC reported.

The move lands four months after Meta agreed to buy Manus for over $2 billion, aiming to plug a fast-rising, Asia-built AI product straight into its core roadmap at a moment when AI agents are becoming a high-stakes battleground across Big Tech.

The deal had already drawn scrutiny on both sides of the Pacific. In Washington, lawmakers have moved to restrict U.S. capital from flowing into Chinese AI companies. In Beijing, officials have stepped up efforts to keep top AI talent and companies from shifting operations overseas.

Manus sits right at that intersection.

The startup was founded in China before relocating to Singapore, a path some founders have used to tap global capital and sidestep tighter domestic oversight. That strategy—often referred to as “Singapore-washing”—has gained traction across the startup ecosystem. China’s move to block the Meta deal sends a clear signal that the approach has limits.

Meta’s AI Ambitions Hit a Regulatory Wall as China Tightens Grip on Cross-Border Deals

The backlash was immediate. Founders and investors who had been leaning on Singapore as a neutral base are now reassessing what that move actually protects.

Manus is not a fringe player. The company builds general-purpose AI agents capable of handling complex work like market research, coding, and data analysis. Its first agent launched last March and quickly drew attention, with some comparing its early momentum to DeepSeek.

Growth followed just as quickly. Manus said it crossed $100 million in annual recurring revenue in December, eight months after releasing its product. The company called it the fastest climb from zero to that milestone.

Investors took notice. In April last year, Manus raised $75 million in a round led by Benchmark.

When Meta announced the acquisition late last year, the pitch was straightforward. The company planned to fold Manus’s technology into its broader AI push, bringing more advanced automation into products like its Meta AI assistant across consumer and enterprise offerings.

Regulators stepped in soon after. In January, China’s Ministry of Commerce opened a review to examine whether the deal complied with rules covering export controls, technology transfers, and overseas investment.

Meta held its ground. A company spokesperson said in March that the acquisition “complied fully with applicable law,” and that the team expected “an appropriate resolution to the inquiry.”

That resolution has now arrived, and it’s final.

The decision lands at a time when global AI competition is shifting from product launches to control—control of talent, capital, and where innovation happens. Deals like this one are no longer just about growth. They are tied to national priorities.

Chen Xu, chair of the APEC Senior Officials Meeting, struck a diplomatic tone when asked about the situation. He said it is “important that all parties act in a spirit of mutual benefit.” He added that handling issues like this well could support broader discussions within APEC.

For Meta, the setback complicates its push to secure a stronger foothold in advanced AI systems. For founders, it raises new questions about where to build and who can invest. And for the broader market, it signals that cross-border AI deals are entering a far more constrained phase.

The Manus deal was meant to accelerate Meta’s AI ambitions. Instead, it has become a case study in how quickly those ambitions can run into geopolitical walls.