Chinese regulators have blocked Meta’s $2 billion acquisition of the agentic AI platform Manus, according to a Financial Times report. In a statement, Chinese regulators told all the parties involved to cancel the acquisition.
As per the report, the regulators said they would prohibit foreign investment in Manus and, in accordance with the law, have required the relevant parties to cancel the acquisition transaction.’
Manus, founded in 2022 by a China-based team, raised $75 million in a Series B round shortly after launch.
The round was led by US venture firm Benchmark and valued the company at around $500 million. The funding attracted scrutiny from US regulators due to executive orders restricting American capital flows into Chinese AI firms, prompting a review by the Treasury Department.
Following the funding, Manus relocated its headquarters to Singapore and significantly scaled down its China operations. This included layoffs in mainland China, the shutdown of local operations, the abandonment of plans for a China-specific product release, and the end of previously discussed technical collaborations with Alibaba.
The structure—building in China, relocating to Singapore, and then selling to a US buyer—is now being examined by regulators who want to prevent other AI startups from taking the same route.
In January, Manus announced plans to join Meta to help develop general-purpose AI agents across its products.
Analysts had already flagged the deal as likely to attract regulatory scrutiny, particularly given the speed of the transaction, which was completed in roughly two weeks, and the fact that Chinese regulators were not informed in advance.
Cui Fan, deputy general secretary and director of research at the China Society for WTO Studies, then told the South China Morning Post that regulators would likely examine whether any technology restricted under Chinese law had been transferred overseas without approval.
He pointed to China’s Regulations on Technology Import and Export Administration, which allow authorities to assess when and how technologies are moved abroad by Manus’s onshore entities.
Despite efforts to distance itself from China, he stated Manus may remain exposed to regulatory oversight. Cui noted there is no confirmation that the company’s core team has renounced Chinese nationality or jurisdiction. He also highlighted that Manus’s mainland-registered parent entity, Butterfly Effect, remains under the founding team, and that early research and development took place within China.
According to the Financial Times, Beijing has characterised the deal as a “conspiratorial” attempt to hollow out China’s technology base.
The review has since expanded into a multi-agency effort, involving bodies examining the transaction through export controls, foreign investment rules, and competition laws.
Meta has already begun integrating Manus into its advertising tools, making any potential unwinding of the deal technically and commercially complex.
The report also noted that earlier regulatory assessments had found Manus did not involve export-controlled technology and that its capabilities were considered replicable. That position is now being revisited amid intensifying scrutiny.
The report added that in March, Chinese regulators barred Manus co-founders Xiao Hong and Ji Yichao from leaving the country amid the investigation.
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