China Orders Meta to Unwind $2B Manus Deal

China’s National Development and Reform Commission ordered Meta to unwind its $2 billion acquisition of AI startup Manus and prohibited foreign investment in the Manus project.

The NDRC said the parties involved must withdraw the completed transaction and that foreign investment in the acquisition of the Manus project is barred. The regulator opened a national security review of the sale in January 2026.

Meta completed the takeover of Manus, a China-founded startup that had reincorporated in Singapore, in December 2025. Manus raised $75 million in May 2025 in a round led by Benchmark. After the acquisition, outside investors exited the company and some operations moved to Singapore.

Manus was created by Butterfly Effect and developed AI agents able to perform tasks such as resume screening and automating stock-analysis websites. Before the acquisition, the company closed its China offices and laid off dozens of employees; its parent company reincorporated in Singapore prior to the sale.

Regulators summoned Manus executives for meetings in March 2026 and restricted two co-founders, CEO Xiao Hong and chief scientist Ji Yichao, from leaving China, according to people familiar with the case. Manus staff have relocated to Meta’s Singapore offices and work on the projects continues there.

The NDRC’s statement said it would “prohibit the foreign investment in the acquisition of the Manus project” and “require the parties involved to withdraw the acquisition transaction.” The office that reviews the security of foreign investments launched an investigation into the transaction after the sale closed.

Chinese authorities have tightened rules on foreign investment and technology transfers since late 2025. Measures include stronger rare-earth licensing, bans on foreign AI chips in state-funded data centers and limits on certain foreign cybersecurity software. In April 2026, regulations signed by Premier Li Qiang gave authorities the power to deny entry, expel and seize assets of foreign entities found to violate Chinese economic policies.

Regulators have instructed some private tech firms to reject U.S. investment in new funding rounds unless the deals receive explicit government approval. Reported recipients of such instructions include AI startups Moonshot AI and StepFun; ByteDance has been required to seek approval for secondary share sales to U.S. investors.

At the same time, the U.S. government has tightened export and investment rules targeting China’s access to advanced chips and other high-tech inputs, and has restricted American investment in certain Chinese AI, semiconductor and quantum companies on national security grounds.

The NDRC order requires reversal of a transaction that closed in December 2025. The regulator’s review and the travel restrictions on Manus executives remain active and under investigation.