Meta’s $2 Billion AI Bet Hits A Wall As China Forces Manus Deal Reversal

Meta’s aggressive push to expand its artificial intelligence (AI) footprint has hit an unexpected geopolitical roadblock.

China has ordered the company to unwind its more than $2 billion acquisition of Manus, an AI startup with Chinese roots, raising fresh concerns over cross-border investments in frontier technologies.
 

TL;DR

• China has ordered Meta to reverse its $2 billion-plus acquisition of Manus
• Regulators reportedly gave both companies weeks to restore Manus’ Chinese assets
• Any transferred data or technology may need to be returned
• Meta and Manus could face penalties if the deal cannot be fully undone
• The move signals tighter scrutiny on U.S.-China AI investments

Meta is now reportedly preparing to dismantle the acquisition after Chinese regulators blocked the transaction on national security grounds, according to reports from The Wall Street Journal and Reuters.

The deal initially appeared to be a strategic win for Meta.

When it announced the acquisition late last year, the company said Manus would help accelerate AI innovation across its consumer and enterprise ecosystem, particularly through automation tools and its Meta AI assistant.

That plan is now unraveling quickly.

According to reports, Beijing has issued a preliminary deadline of several weeks for both companies to completely reverse the transaction. That includes restoring Manus’ Chinese assets to their original state and removing any technology or data that may have already been transferred to Meta.

Chinese regulators are also reportedly weighing penalties if the companies fail to fully rescind the deal.

Meta has not publicly commented beyond previously stating that the transaction “complied fully with applicable law” and that it expected “an appropriate resolution to the inquiry.” Manus has also remained silent.

 

Why China Blocked Meta’s Manus Acquisition

China’s National Development and Reform Commission said the decision was made in accordance with local laws governing foreign investment.

The scrutiny began in January, just days after Meta completed the acquisition. China’s Ministry of Commerce launched an investigation into whether the transaction violated regulations tied to export controls, overseas investments, and technology transfers.

The deal had already drawn attention in Washington as well, where lawmakers have increasingly pushed back against U.S. capital flowing into Chinese AI firms.

That left Manus trapped in the middle of two governments becoming increasingly protective of advanced AI development.

The timing is especially notable as the move comes just weeks before a planned mid-May summit in Beijing between U.S. President Donald Trump and Chinese President Xi Jinping, adding another layer of geopolitical tension.
   

Manus Became One Of AI’s Fastest Growing Startups

Manus was originally founded in China before relocating to Singapore, a strategy increasingly used by startups attempting to sidestep regulatory pressure from both Beijing and Washington.

Manus develops general-purpose AI agents capable of handling tasks such as coding, market research, and data analysis.

Its rapid growth helped attract major investors.

Manus reportedly crossed $100 million in annual recurring revenue in December, just eight months after launching its product, claiming it was the fastest startup globally to reach that milestone from zero revenue.

The company also raised $75 million in an April funding round led by Benchmark. Other investors included Tencent, HSG, and ZhenFund.

Now, some of those Asian investors are reportedly preparing to cooperate if Meta fully unwinds the acquisition.

The bigger takeaway is clear: even relocating to markets like Singapore may no longer shield AI startups from rising regulatory scrutiny as governments tighten control over who owns the future of AI.