The Chinese authorities recently blocked the American social media giant Meta from acquiring the artificial intelligence (AI) startup Manus for about $2 billion, sparking widespread controversy. Experts believe that Beijing’s tough measures in the face of the strategic intent to confront American technology will severely damage the Chinese industry. Furthermore, the handling of such mergers and acquisitions cases between the United States and communist China is vastly different due to the two countries’ different systems.
The China Foreign Investment Security Review Office announced on April 27th that it had decided to prohibit foreign investment in the Manus acquisition project and demanded that the parties involved withdraw from the acquisition deal. This is the first publicly announced AI-related foreign acquisition case halted since China implemented the Foreign Investment Security Review Measures in 2021.
Manus was founded by Chinese engineers. In March last year, Manus became another AI upstart in China after DeepSeek. The AI startup company introduced AI applications that can perform complex tasks without human intervention, seen as the next stage in AI development.
Manus initially had a parent company in China – Beijing Butterfly Effect Technology Co., Ltd. This tech company raised $75 million from the American venture capital firm Benchmark in May 2025, moved its global headquarters to Singapore the following month, and ceased operations in China in July.
On December 30th last year, the American social media giant Facebook’s parent company Meta announced the acquisition of Manus for $2 billion and swiftly integrated the new technology into its system. However, in January this year, China’s Ministry of Commerce stated that it would investigate Meta’s acquisition of Manus.
Before the Chinese official announcement to block the acquisition, it was reported last month that Manus’s CEO Xiao Hong and Chief Scientist Ji Yichao were summoned in Beijing and were told not to leave China.
Beijing’s ban on Meta’s acquisition of Manus has drawn international media attention, raising concerns about the risks of China’s technology cross-border transactions.
On Monday, Meta released a statement saying that the related transaction fully complies with relevant laws, and they expect the investigation to be resolved appropriately.
It is reported that since the acquisition in December last year, Meta has swiftly taken action to integrate Manus’s technology into its system. The Wall Street Journal cited sources on Monday saying that Meta is preparing to retract the acquisition, and Beijing has preliminarily set deadlines for both companies to unwind the deal and fully restore Manus’s assets in China, including detaching all previously transferred data and technology from Meta.
However, due to overseas investors like the American venture capital firm Benchmark also obtaining returns, reversing the transaction has become more complicated, and it remains unclear whether Beijing has the ability to actually overturn the acquisition.