Meta's acquisition of Manus collapses after China blocks deal

Meta's $2 billion acquisition of Manus, a Chinese-founded AI startup, has fallen apart after Chinese authorities moved to block the deal — roughly four months after Beijing formally ordered the transaction unwound.

Manus announced Tuesday on its website that it would soon operate as an independent company. "This is part of our separation process with Meta," the company said. "To comply with regulatory requirements in some parts of the world, we must take this step."

The company added that some data created after Dec. 29 last year would be deleted, and urged affected users to back up their data. The statement was widely interpreted as an acknowledgment that the deal had collapsed under pressure from Chinese authorities.

Manus is a general-purpose AI agent developed by Chinese firm Butterfly Effect. It drew wide attention for demo videos showing it autonomously completing tasks from a single prompt, earning comparisons to DeepSeek as a breakout Chinese AI product. The company relocated its headquarters from China to Singapore in July last year, but its core technology and workforce are still seen as closely tied to China.

Meta, which operates Facebook and Instagram, acquired Manus in December last year in a deal valued at around $2 billion.

At the time, Meta said Manus would "join Meta to deliver leading agents to billions of people and open up opportunities for businesses across our products."

The acquisition drew close scrutiny from the outset, coming as the Chinese government was tightening its stance against the outflow of domestic technology companies.

Beijing moved to review whether the deal fell under technology export controls. Foreign media reported that Manus CEO Xiao Hong and Chief Science Officer Ji Yichao had been summoned to Beijing and barred from leaving the country.

Chinese authorities formally ordered the deal unwound in April. The foreign investment security review office under the National Development and Reform Commission said on April 27 that it had "decided to prohibit foreign capital from acquiring Manus in accordance with laws and regulations" and had "required the parties to unwind the transaction."

At the time, some observers cautiously noted that reversing a completed transaction would be difficult. Meta maintained that its acquisition of Manus had been in full compliance with all applicable laws.

In the end, neither company could withstand the pressure from Beijing. The deal collapsed in less than four months after the unwinding order — about eight months after Meta first announced the acquisition. The outcome marks a significant turning point in the intensifying US-China technology rivalry centered on semiconductors and AI, with Meta ultimately forced to back down.

Analysts say the collapse demonstrates that China's technology controls can reach companies that have moved their operations abroad. The setback is also seen as a potential blow to Meta's efforts to strengthen its position in AI, where it has been regarded as a relative latecomer.

Meta CEO Mark Zuckerberg, in a lengthy essay published Monday, warned of the dangers of closed AI systems and criticized the current trajectory of development dominated by a small number of companies. "Rather than centralizing superintelligence, we should distribute it widely so that everyone can have access to it," he said.

Meanwhile, the Financial Times reported last month, citing multiple sources, that previous Manus investors were in talks to reacquire stakes in the company at a valuation of $2 billion. Tencent Holdings, one of China's leading technology conglomerates, was said to be among those in discussions to become the largest shareholder.