China blocks Meta’s $2B Manus acquisition: deal collapses

China has definitively blocked Meta’s acquisition of AI startup Manus. The Chinese company, valued at $2 billion, is now independent after a formal ban by Beijing authorities in April 2026.

A deal canceled after four months of tug-of-war

Meta had announced on December 29, 2025, the acquisition of Manus, an AI agent startup, for approximately $2 billion. Founded in China in 2022 under the name Butterfly Effect, Manus had been relocated to Singapore six months before the deal, a practice known as “Singapore-washing” to bypass Chinese regulations.

In late April 2026, China’s National Development and Reform Commission banned the transaction, demanding that both parties abandon it. Manus confirmed on Tuesday, August 12, its return to independent status, without explicitly mentioning pressure from Beijing. In a note to users, it stated that the separation “is part of our compliance with regulatory requirements in certain regions of the world”.

A textbook case for Beijing and its startups

Manus is an AI agent, a software capable of executing complex tasks (travel booking, market analysis) from a simple command. Launched in March 2025, it was hailed as the “new DeepSeek” in China. The case highlights Beijing’s end of tolerance for “Singapore-washing,” a strategy used by Chinese companies to raise foreign funds or evade local regulations.

“Beijing has so far tolerated this practice, but the Manus case marks a major turning point. The signal is aimed at its own tech leaders: attempts to circumvent national regulations will not be tolerated.” — Wendy Chang, researcher at the Mercator Institute for China Studies (Merics)Translated from French

According to the Financial Times, Tencent, a former investor in Manus, was negotiating its sale to Meta in July 2026 for the same $2 billion. The Chinese group would then become the largest shareholder, while remaining a minority stakeholder.

Consequences for Meta and users

For Meta, this failure comes at a bad time. The company, lagging in the race for cutting-edge AI models, relaunched its open-source models on Monday, an approach it had abandoned in late 2025 after disappointing results. Manus users, meanwhile, must back up their data before August 23: data generated since the acquisition will be deleted on August 23 and 24.

China confirms its intent to strictly control foreign investment in AI. After Manus, other deals could face scrutiny or even be blocked if they bypass local rules.