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China has ordered Meta to unwind its $2bn acquisition of artificial intelligence app Manus, as Washington and Beijing vie for dominance over the emerging technology.
The decision marks an extraordinary late-stage intervention by Beijing, involving two non-Chinese companies. Meta had already begun to integrate software from Manus, which was founded in China but relocated to Singapore last year.
It was unclear how the acquisition could be unwound at such a late stage. A person briefed on Beijing’s decision said the announcement could be intended primarily as a warning for similar deals in the future.
The person said the gesture was “pretty harsh and it carries a strong intention to stop follow-on deals [like Manus]. In reality, it’s hard to unwind a done deal.”
The announcement comes ahead of an expected summit next month between US President Donald Trump and his Chinese counterpart Xi Jinping, when the leaders will address longstanding tensions over trade.
Regulators began investigating in January whether China’s investment rules had been violated by Silicon Valley-based Meta’s acquisition of Manus, whose autonomous AI tools can carry out complex tasks.
China’s powerful National Development and Reform Commission (NDRC) said on Monday it would prohibit “foreign investment” in Manus and in accordance with the law has “required the relevant parties to cancel the acquisition transaction”.
To undo the deal at this stage, Meta could have to spin off its acquisition to a new buyer, sell it back to its former investors or find new backers. Any such process would be complex, as Meta has already integrated Manus into some of its tools, the FT has reported.
A person familiar with the matter said Beijing had told the two companies that the deal must be unwound completely, including returning funds, re-registering the company’s ownership and halting Meta’s use of the Manus algorithm.
The person said that if the parties failed to fully undo the acquisition, Beijing could impose penalties on Meta, limit its China-related business and possibly pursue criminal charges for individuals involved.
A Meta spokesperson said: “The transaction complied fully with applicable law. We anticipate an appropriate resolution to the inquiry.”
Manus allows users to build and run personal AI “agents” that are capable of independently executing complex tasks, managing files and creating software.
The original creator of the company, AI start-up Butterfly Effect, was founded in China in 2022. Last year, Butterfly Effect moved its headquarters and core team to Singapore following a funding round led by top US venture capital firm Benchmark Capital.
Within months, Meta swooped in to buy the AI app, as part of the parent of Instagram and WhatsApp’s costly efforts to catch up with OpenAI and Google in AI. The $2bn deal was announced in December and closed earlier this year.
The current listing for what is described as “Manus from Meta” on Apple’s App Store still describes Butterfly Effect’s Singaporean entity as the software’s developer.
Multiple Chinese regulators have reviewed the transaction, including the NDRC, the commerce ministry and China’s antitrust watchdog, the FT reported this month.
Beijing earlier branded the acquisition a “conspiratorial” attempt to hollow out the country’s technology base.
Officials had been examining the deal using a range of tools, from export control rules to foreign investment and competition laws, people familiar with the matter have said.
In March, Beijing restricted two co-founders of Manus from leaving the country as the deal was reviewed.
Manus describes itself as an “action engine” that can “extend your human reach”. It launched in March 2025, just two months after DeepSeek’s debut of a powerful open-source model capable of “reasoning” sparked a panic among US tech investors about Chinese AI advances.
The Manus app was an early forerunner of OpenClaw, which has taken both Silicon Valley and China by storm this year. Both go beyond the likes of OpenAI’s ChatGPT, which largely focuses on processing information and answering questions.
The Manus acquisition represents the second major deal in which Beijing has intervened, following the sale by CK Hutchison of 43 global ports, originally including two in Panama, to a BlackRock-backed consortium.
In that case, authorities pushed for the acquiring party to include a Chinese group as well, although that deal has not yet closed.
With additional contributions by Cheng Leng in Beijing