BEIJING — China's National Development and Reform Commission formally prohibited Meta's proposed $2 billion acquisition of artificial intelligence startup Manus on Monday and ordered the parties to unwind the transaction. The decision was issued by the commission's Office of the Working Mechanism for Security Review of Foreign Investment.

In January 2026, regulators launched a review of the proposed acquisition. In late March 2026, the Ministry of Commerce initiated a national security review of Meta's proposed $2 billion acquisition. Also in late March 2026, Manus co-founder Ji Yichao was barred from leaving China following a meeting with the National Development and Reform Commission in Beijing.

Meta announced the $2 billion acquisition on December 30. Manus debuted in March 2025 by demonstrating its ability to complete tasks traditionally performed by white-collar workers, with the slogan "Leave it to Manus."

Between June and July 2025, Manus moved its headquarters to Singapore and switched its operating entity to Butterfly Effect Pte. The company reduced its mainland team from more than 120 staff to about 40 core members and relocated them to Singapore. Manus also cleared its China-based social media accounts and blocked China's IP addresses from accessing its website, operating as a Singapore-based company by late 2025. Manus severed ties with China to secure Meta's proposed $2 billion investment.

"This is not a ban on Chinese firms' global expansion plans, but a ban on evading regulation," said Zhu Youping, a researcher at the State Information Center. "If the proposed acquisition is completed, Meta would obtain 100% control in Manus, but neither Meta nor Manus had declared this to the Chinese regulators," he said.

Yuyuan Tantian said the legal basis for the review was clear. "Under Article 4, investments involving national defense security must be declared regardless of foreign ownership levels, while in key sectors such as important information technology, internet products and services, and critical technologies, any foreign investor gaining actual control falls within the review scope," Yuyuan Tantian said. "Manus's core assets, including algorithms, data and talent, were developed within China by domestic teams, and any transfer of control overseas would require a national security review," it added.

Business columnist Shengchandui addressed the jurisdictional question. "Data sovereignty cannot be compromised. Manus processes vast amounts of data, much of it from Chinese users. Transferring control overseas risks turning technology outflow into potential data leakage, especially under stricter rules governing cross-border data transfers," Shengchandui said. "Where the technology originates determines jurisdiction," the columnist added.

Yuyuan Tantian also addressed the broader international context. "At present, some countries are expanding the scope of security reviews and blurring the definition of threats, specifically targeting the AI development of other countries. This value orientation is influencing their narrative of security," it said. "In order to safeguard their own security, they may even use other countries' capabilities to attack them. We have to be vigilant," Yuyuan Tantian said. "Meanwhile, China will continue to encourage AI innovation and remain open to foreign investment," it added.

Since October 2024, U.S. restrictions have barred American funds from investing in China's AI sector.