China Orders Meta to Unwind $2 Billion-Plus Purchase of AI Startup Manus on Security Grounds

Chinese authorities have ordered Meta to reverse its acquisition of AI agent developer Manus, a deal valued at more than $2 billion, underscoring Beijing's intensifying review of U.S. investment tied to China-linked frontier technology. The National Development and Reform Commission said its foreign investment security review office would bar foreign investment in Manus and require the parties to withdraw the transaction. While the order did not name Meta, Reuters reported it is aimed at Meta's already completed purchase. The decision is notable for attempting to roll back a finished cross-border technology deal involving a company that had shifted operations outside mainland China. Manus closed its China offices in July following a $75 million funding round led by Benchmark in May 2025, cut dozens of roles, and moved operations to Singapore via its parent, Butterfly Effect. Meta bought Manus to advance its push into AI agents—software designed to complete complex tasks with limited human input. Manus develops general-purpose agents used for activities such as app development, market research, and financial planning. Beijing's move signals regulators are assessing more than a target's place of incorporation. Reuters, citing legal analysts, said reviews may consider technology origin, R&D location, founder nationality, prior China operations, data flows, and offshore restructuring when evaluating sensitive transactions. The decision also takes aim at a strategy sometimes described as "Singapore washing," in which China-linked startups relocate operations to Singapore to tap foreign capital and lower regulatory risk. Analysts told Reuters the Manus case raises compliance expectations for startups in sensitive sectors, particularly when intellectual property, data, research teams, or founding history remain connected to China. Meta said the transaction fully complied with applicable laws and that it expects an appropriate resolution to the inquiry. The development comes weeks ahead of a planned mid-May summit in Beijing between President Donald Trump and Chinese President Xi Jinping, placing the deal squarely within the broader U.S.-China competition over AI, chips, data, and strategic technology control.