China Just Killed Meta's $2 Billion Manus Deal, and the Fallout Could Reshape AI M&A

Two billion dollars spent, roughly 100 employees already settled into Meta's Singapore offices, and Beijing says: "Give it all back." China's National Development and Reform Commission (NDRC) ordered the full reversal of Meta's acquisition of Manus this Monday.

China blocks Meta's Manus acquisition

Meta announced the deal in December 2025, paying an estimated $2 billion to $3 billion for the agentic AI startup. China's Ministry of Commerce launched a probe in January 2026, scrutinizing whether the transaction complied with export control and technology transfer laws.

By March, cofounders Xiao Hong (CEO) and Ji Yichao (chief scientist) were summoned to Beijing and barred from leaving the country. The NDRC's Monday statement was blunt: foreign investment in Manus is now prohibited, and both parties must withdraw.

Why unwinding this deal will be messy

Here's the catch: integration was already well underway. Around 100 Manus employees had moved into Meta's Singapore offices, and Manus technology had been woven into Ads Manager and the Instagram Creator Marketplace.

Meta maintains that the transaction "complied fully with applicable law" and anticipates "an appropriate resolution." Good luck with that when China's most powerful economic planner is the one saying no.

Manus AI and the end of "Singapore washing"

Founded in China, Manus made global headlines in March 2025 with an autonomous AI agent that could code, research, and automate tasks on its own. The startup drew comparisons to DeepSeek for its disruptive potential. After a $75 million raise led by Benchmark, the team relocated to Singapore mid-2025.

That offshore playbook, dubbed "Singapore washing" by VCs, is now dead on arrival. Beijing has shown that relocation does not place a Chinese-origin AI company beyond its regulatory reach. American lawmakers had their own doubts too, questioning whether US capital should flow to a firm with deep Chinese roots.

A warning shot across the entire AI industry

The ripple effects go far beyond one startup. Chinese AI firms like Moonshot AI and ByteDance have reportedly been told to reject US capital without prior regulatory approval. For Chinese founders dreaming of a Western-style exit, the runway just got much shorter.

The US-China tech rivalry is no longer confined to semiconductors. Talent, code, and every autonomous AI agent capable of running an ad campaign or writing software are now part of the battlefield.