Beijing Pulls the Plug: Meta's $2 Billion Manus Acquisition Blocked

Last December, Meta announced a $2 billion acquisition of Manus, a Singapore-headquartered AI agent startup founded by Chinese engineer Xiao Hong. On Monday, four months later, the foreign investment security review office under China's National Development and Reform Commission ordered both sides to withdraw the deal.

It is the first known use of the foreign investment security review mechanism introduced in late 2020. Meta has indicated it will comply, according to multiple reports.

Why this matters now

Manus was launched in March 2025 and was hailed by Chinese state media as "the next DeepSeek." Its co-founders, CEO Xiao Hong and chief scientist Ji Yichao, raised a $75 million Series B led by Benchmark Capital in April 2025 at a $500 million valuation. In June, the company relocated its HQ to Singapore via a new entity called Butterfly Effect, then laid off 80 of its 120 China-based core technical staff.

Meta announced the acquisition in late December after only a few weeks of due diligence. Neither Meta nor Manus sought Chinese regulatory approval for the deal or the relocation, according to five sources cited by Reuters.

Why "Singapore washing" did not work

Beijing's framing is that Manus's technology, talent, and data remain Chinese, regardless of where the holding company sits. According to Bloomberg and CNBC, the decision to block the deal was elevated beyond economic regulators to China's National Security Commission, the body chaired by Xi Jinping.

Xiao Hong and Ji Yichao have reportedly been barred from leaving China since March, after being summoned to Beijing for talks with regulators. China's state-backed Global Times wrote that the issue is not where Manus is registered, but "the extent of its technological, talent and data links with China."

The mechanical problem

The acquisition is already done. Manus engineers moved into Meta's Singapore offices and were granted Meta corporate accounts. Meta and Manus held joint working sessions for months, according to a Meta employee cited by SCMP. Several lawyers told the Hong Kong paper that unwinding the integration will be "time-consuming, complex, and difficult."

Han Shen Lin, China country director at The Asia Group in Shanghai, summed up the read in plain terms: "Beijing effectively drew a bright red line that Chinese AI talent and technology are not for sale to American companies, full stop."

The next test sits on the calendar. Trump is scheduled to visit Beijing in mid-May. Mark Zuckerberg may try to put the Manus case on that agenda. Beijing has just signaled how that conversation will go.

Sources: Yicai Global, CNBC, SCMP, DealStreet Asia, Bloomberg