China blocks Meta's $2B acquisition of AI startup Manus

China blocked US tech giant Meta from acquiring the AI firm Manus on Monday.

China's National Development and Reform Commission (NDRC) said in a one-line statement that it would "prohibit foreign investment in Manus in accordance with laws and regulations, and requires the parties involved to withdraw the acquisition transaction."

The announcement will force Meta to unwind its purchase of Manus, which was believed to cost upwards of $2 billion (€1.7 billion).

Meta, which owns Facebook, Instagram and WhatsApp, among others, said in a statement that its purchase of Manus had "complied fully with applicable law."

"We anticipate an appropriate resolution to the inquiry," the California-based company added.

What is Manus?

Manus made headlines last year after announcing what it called the world's first general AI agent — capable of various tasks like coding, conducting market research and preparing budgets.

Manus does not build its own AI model. Instead, its agent framework operates on top of existing Western large language models.

The company shut its Chinese offices in July last year and relocated its operations to Singapore, where its parent company was re-incorporated.

This move allowed Manus to circumvent US restrictions on investing in Chinese AI firms as well as Chinese rules that limited AI startups' ability to transfer IP and capital abroad.

Meta announced in December that it would acquire Manus and said at the time that there would be "no continuing Chinese ownership."

China-US AI rivalry heats up

China has been racing in its attempt to surpass American AI innovation as a matter of both economic strength and national security, at times with some success such as when the launch of its indigenous DeepSeek model caused US stocks like Meta, Nvidia and Microsoft to plummet before recovering some of the losses.

Meta's decision last year to acquire Manus was a rare case of a US tech giant buying an AI firm with strong links to China.

But Beijing's decision to unwind the acquisition could also set a new precedent.

"China is showing the world that it is willing to play hardball when it comes to AI talents and capabilities, which the country views as a core national security asset," Lian Jye Su, chief analyst at the technology research and advisory group Omdia, told the Associated Press.

"It is strongly indicative of what Chinese authorities may do going forward regarding acquisitions involving Chinese deep-tech companies."

Edited by: Srinivas Mazumdaru