China orders Meta to unwind $2B Manus acquisition after security review

China ordered Meta to unwind its completed acquisition of artificial intelligence startup Manus, reversing a deal worth more than $2 billion. (reuters.com) China’s National Development and Reform Commission said foreign investment in Manus was prohibited under Chinese laws and regulations and told the parties to withdraw the transaction. Reuters reported the order on Monday, April 27. (reuters.com) (cnbc.com) Meta had bought Manus in December after the startup repositioned itself in Singapore, even though its roots, founders, and early development were in China. Reuters said China’s commerce ministry opened an investigation in January, days after the takeover was completed. (reuters.com) (cnbc.com) Manus builds AI agents, software that can carry out multi-step jobs like research, coding, and analysis with limited human input. Meta said when it announced the deal that Manus would help expand automation inside Meta AI and business tools. (cnbc.com) The case shows how Beijing is treating AI talent and code more like strategic assets than ordinary startup property. Reuters reported that China rarely orders completed corporate deals to be unwound, making this intervention unusual on its face. (reuters.com) It also hits a model many Chinese founders had been using: move the company to Singapore, raise U.S. money, and try to stay outside both Washington’s and Beijing’s toughest restrictions. CNBC said Manus had become a prominent example of that “Singapore-washing” approach. (cnbc.com) Reuters reported that Manus raised $75 million in a 2025 funding round led by Benchmark, shut its China offices in July, and shifted operations to Singapore without Chinese regulatory approval. That restructuring let its parent, Butterfly Effect, re-incorporate in Singapore. (reuters.com) The regulatory pressure escalated in March, when Manus chief executive Xiao Hong and chief scientist Ji Yichao were summoned to Beijing and then barred from leaving China, according to Reuters. Neither executive responded to Reuters requests for comment. (reuters.com) Meta had previously said the acquisition complied with applicable law. CNBC reported Monday that the company did not immediately respond to a fresh request for comment after China’s order. (cnbc.com) Reuters said some Manus staff had already moved into Meta’s Singapore offices and projects were continuing even while the review was underway. Beijing’s order now forces the companies to try to unwind a transaction that had already begun to integrate. (reuters.com) The immediate question is not whether China objected to this deal in principle, but whether it will now challenge other offshore restructurings involving Chinese AI companies. Monday’s order says Beijing is prepared to reach past formal headquarters and look at where the technology and people actually came from. (reuters.com) (cnbc.com)