Meta says Manus acquisition complied with law as China orders transaction reversal over foreign investment rules
Meta Platforms has revealed an ongoing dilemma for China: the country desires its technology giants to expand globally, but does not want them to leave home. Beijing effectively instructed the social-media giant to undo its $2 billion acquisition of artificial intelligence startup Manus, which had moved to Singapore. This will be a complicated process, one that also strongly conveys a clear message to other local entrepreneurs.
Engineers Red Xiao and Ji Yichao officially launched Manus about a year ago under a Chinese parent. The venture attracted attention from Silicon Valley because its agents can handle complex tasks, from booking travel to managing spreadsheets, with minimal human input. Meta said Manus would exit China entirely with no residual ownership there.
Reversing the process will be tricky. Manus had largely extricated itself before Meta boss Mark Zuckerberg came along. After raising $75 million from U.S. venture capital firm Benchmark in May 2025, it closed its China offices, laid off staff and shifted operations to Singapore. Subsequently, Manus employees moved to Meta offices there.
Now Beijing is belatedly trying to reassert control. The two co-founders were banned from leaving China during the regulatory review, Reuters reported. Meta’s apps, including Facebook and Instagram, don’t operate in China, however, limiting the scope of official leverage.
Unwinding the deal is also complex. Questions remain over how Meta would recover funds from earlier backers, including Chinese tech giant Tencent, and whether those investments must be reversed under Monday’s directive from the National Development and Reform Commission, China’s state economic planner. More importantly, once the people, code and intellectual property are integrated, separation becomes even tougher.
The episode underscores the AI tension. Beijing officials appear to have underestimated Manus’s strategic value, reacting only after the firm decamped and was then acquired. The fallout is also likely to feature in U.S.-China diplomatic discussions scheduled for next month.
However the Meta dispute plays out, the deterrence effort will not be lost on locals. Slipping out of China to pursue international capital and suitors won’t be easy.
It’s a painful time for such an edict. U.S. AI startups raised nearly $270 billion in the first quarter, more than 13 times as much as their Chinese counterparts, according to a KPMG report. Even as Manus exemplifies its home country’s ambitions in cutting-edge technology, it simultaneously showcases the limitations.
China on April 27 ordered social media giant Meta Platforms to unwind its December 29 acquisition of artificial intelligence startup Manus, which relocated to Singapore after it was started in Beijing.
The National Development and Reform Commission said it would "prohibit foreign investment in Manus in accordance with laws and regulations, and requires the parties involved to withdraw the acquisition transaction."
The state economic planning agency did not name Meta or other overseas investors in Manus.
"The transaction complied fully with applicable law," Meta said in a statement to Reuters. "We anticipate an appropriate resolution to the inquiry."
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