China has blocked Meta Platforms Inc.'s planned $2 billion acquisition of the agentic AI startup Manus, issuing an order to cancel a deal that was already close to completion. The intervention by China's National Development and Reform Commission (NDRC) was announced on Monday, representing a significant escalation in Beijing's oversight of strategic technology transactions involving artificial intelligence and cross-border investment.
The acquisition, announced in December, quickly came under scrutiny from Beijing. A probe was launched into potential illegal foreign investment and concerns over the export of sensitive technologies. Regulators examined whether the deal could result in the transfer of advanced AI capabilities to the United States, reflecting a broader focus on technological sovereignty. During the review, Manus CEO Xiao Hong and chief scientist Ji Yichao were reportedly prevented from leaving China, highlighting the tight control being exerted over AI assets and talent.
The decision marks a shift in China's stance. While the deal was initially seen as a template for Chinese startups to scale globally by partnering with international giants, sentiment turned amid concerns about the strategic implications of losing valuable AI technology to a geopolitical rival. State media had described Manus as a potential rival to DeepSeek after it introduced what it called the first general AI agent.
Implications for future deals
The abrupt halt to the Meta-Manus transaction is expected to have wider implications for future M&A in the AI space. Companies in China's tech ecosystem may face increased regulatory hurdles, especially when dealing with foreign buyers. The decision could also deter similar deals as startups and investors reassess cross-border risks. Alfredo Montufar-Helu, managing director at Ankura China Advisors, stated: "China is saying we will prevent foreign acquisition of assets we consider important for national security — and AI is now clearly one of them."
Despite relocating its headquarters to Singapore, Manus remained subject to Chinese regulatory oversight, a move signaling that relocation does not shield firms from government intervention. The decision is expected to add friction ahead of a planned mid-May meeting in Beijing between Donald Trump and Xi Jinping, where tech and trade disputes are expected to be prominent.
For global tech firms like Meta, the development underscores the growing complexity of navigating regulatory environments amid rising geopolitical tensions. Deals involving advanced technologies will face heightened scrutiny, with national security considerations increasingly shaping global investment flows.
