China has ordered Meta to complete its $2 billion acquisition of artificial intelligence app Manus, as Washington and Beijing battle for dominance over the emerging technology.
The decision marks an extraordinary late-stage intervention by Beijing involving two non-Chinese companies. Meta had already started integrating software from Manus, which was founded in China but moved to Singapore last year.
It was unclear how the takeover could be completed at such a late stage. A person briefed on Beijing’s decision said the announcement could primarily serve as a warning about similar deals in the future.
The person said the gesture was “quite harsh and had a strong intention to stop further deals.” [like Manus]. In reality, it is difficult to undo a done deal.”
The announcement comes ahead of an expected summit next month between US President Donald Trump and his Chinese counterpart Xi Jinping, where the leaders will discuss long-standing tensions over trade.
“China’s reported use of threats and coercive exit bans against Meta and its employees is consistent with the Chinese government’s long-standing interference in normal business transactions,” said Kush Desai, a White House spokesperson.
“The Trump Administration will continue to defend America’s leading and innovative technology sector from any form of excessive foreign interference.”
Chinese regulators in January began investigating whether the country’s investment rules had been violated by Manus’ acquisition of Silicon Valley-based Meta, whose autonomous AI tools can perform complex tasks.
China’s powerful National Development and Reform Commission (NDRC) said on Monday it would ban “foreign investment” in Manus and in accordance with the law “obligated the relevant parties to cancel the takeover transaction”.
To undo the deal at this stage, Meta might have to spin off the acquisition to a new buyer, sell it back to its former investors or find new lenders. Such a process would be complex, as Meta has already integrated Manus into some of its tools, the FT reports.
A person familiar with the matter said Beijing had told the two companies that the deal needed to be fully unwound, including returning funds, reregistering 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 takeover, Beijing could impose fines on Meta, restrict its China-related activities and possibly bring criminal charges against the individuals involved.
A spokesperson for Meta said: “The transaction fully complied with applicable law. We expect an appropriate resolution to the investigation.
Manus allows users to build and run personal AI agents capable of independently performing complex tasks, managing files, and creating software.
The company’s original founder, AI startup 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 US venture capital firm Benchmark Capital.
Within months, Meta swooped in to buy the AI app, part of Instagram and WhatsApp’s parent company’s costly efforts to catch up with OpenAI and Google in AI. The $2 billion deal was announced in December and completed earlier this year.
The current listing of 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 reviewed the transaction, including the NDRC, the Commerce Ministry and China’s antitrust watchdog, the FT reported this month.
Beijing previously called the takeover a “conspiratorial” attempt to erode the country’s technological base.
Officials had investigated the deal using a range of tools, from export control rules to foreign investment and competition laws, people familiar with the matter said.
In March, Beijing banned two Manus co-founders from leaving the country as the deal was reviewed.
Manus describes itself as an “action engine” that can “extend your human reach.” Its launch in March 2025, just two months after DeepSeek’s debut of a powerful open-source model capable of “reasoning,” sparked panic among US tech investors over Chinese AI advances.
The Manus app was an early precursor to OpenClaw, which has taken both Silicon Valley and China by storm this year. Both go beyond OpenAI’s ChatGPT, which largely focuses on processing information and answering questions.
The Manus takeover represents the second major deal in which Beijing has intervened, following CK Hutchison’s sale of 43 global ports, including two originally in Panama, to a BlackRock-backed consortium.
In that case, authorities insisted that the acquirer also involve a Chinese group, although that deal has not yet been finalized.
With additional contributions from Cheng Leng in Beijing
