Key Highlights
- Chinese regulators at the NDRC rejected Meta’s proposed purchase of Manus AI on Monday
- The tech giant had reached an agreement to purchase Manus last December for over $2 billion
- Two key executives from Manus were prohibited from departing China in March amid regulatory scrutiny
- Chinese authorities demanded all involved parties terminate the acquisition agreement
- The decision demonstrates China’s strategy to retain control over domestic artificial intelligence companies
Meta had been aggressively expanding its presence in the AI agent market. Last December, the social media giant revealed plans to purchase Manus — an innovative AI agent developed by Butterfly Effect, a startup initially established in China before relocating operations to Singapore.
The acquisition was valued at over $2 billion, according to estimates from Bloomberg Intelligence researchers.
Manus had gained significant attention in early last year when Chinese government media outlets dubbed it the nation’s answer to DeepSeek following the launch of what the company described as the world’s first comprehensive AI agent. The technology demonstrated capabilities including resume evaluation and automated creation of stock analysis platforms.
However, industry experts warned from the outset that the transaction faced substantial regulatory hurdles due to the persistent technological competition between Washington and Beijing.
Those warnings ultimately materialized.
Chinese Officials Intervene
The situation escalated dramatically in March. Manus chief executive Xiao Hong and lead scientist Ji Yichao received summons to Beijing, where they were informed of travel restrictions preventing their departure from China during the regulatory evaluation period. Both executives typically operate from Singapore.
On Monday, the National Development and Reform Commission of China officially terminated the deal. The regulatory body announced it would “prohibit the foreign investment in the acquisition of the Manus project” and instructed all parties to completely withdraw from the proposed transaction.
The commission indicated the ruling was issued “in accordance with laws and regulations,” but provided no additional explanation.
Industry observers are paying close attention to the implications. Despite Manus having transferred its corporate headquarters from China to Singapore — a strategic maneuver employed by numerous Chinese enterprises to minimize vulnerability to US-China geopolitical friction — the relocation provided no regulatory shield.
According to Alfredo Montufar-Helu from Ankura China Advisors, the ruling demonstrates that regulatory restrictions previously concentrated on semiconductor technology are now expanding into artificial intelligence sectors. “China is making clear its intention to block foreign purchases of assets deemed critical for national security — and artificial intelligence has unmistakably joined that category,” he noted.
When announcing the agreement in December, Meta stated the acquisition would “bring a leading agent to billions of people and unlock opportunities for businesses across our products.” The technology company has yet to issue a statement regarding Monday’s regulatory prohibition.
The NDRC’s action may introduce an additional discussion point for the scheduled mid-May meeting between President Trump and President Xi Jinping.
Meta stock declined 2.41% following the announcement.
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