China Bans Meta's Manus Purchase --- Decision reflects Beijing's attempts to help safeguard China's AI capabilities

 

 

“China has banned Meta Platforms' acquisition of artificial-intelligence startup Manus on national security grounds and ordered that the $2.5 billion deal be unwound.

 

China's National Development and Reform Commission, which has the authority to review foreign investments, said Monday it has banned the acquisition and ordered it to be rescinded. "The transaction complied fully with applicable law," a Meta representative said in an email statement. "We anticipate an appropriate resolution to the inquiry."

 

The development signals that Beijing is intent on limiting foreign involvement in its tech sector and keeping intellectual property from leaving the country at a time when the U.S. and China are locked in an intensifying technology race. Both countries have tightened export controls, restricted the exchange of tech professionals and curbed cross-border investment.

 

The move puts Meta in a challenging position. While Facebook and other Meta apps aren't available in China, Meta garners significant revenues from Chinese advertisers.

 

Manus has developed an AI agent that can carry out sophisticated tasks such as writing in-depth research reports and preparing presentation slides. Early versions of Manus were created by engineers at Beijing Butterfly Effect Technology, which was founded in China in 2022.

 

Last year, a Singapore-based entity, also called Butterfly Effect, took over the operations of the AI agent product in markets outside China. Manus relocated most of its China-based employees to Singapore after receiving investment from a California-based venture-capital firm.

 

Then, in December, Meta acquired Manus. Days later, Chinese authorities announced a review of the deal, saying cross-border deals and the export of technology must comply with the law.

 

Last month, Chinese officials called in the two co-founders of Manus -- Xiao Hong and Ji Yichao -- to discuss the deal in Beijing. The executives, who work for Meta, were later told not to leave the country during the investigation, The Wall Street Journal has reported. Many of Manus's top executives are Chinese nationals.

 

According to Chinese law, any foreign investments that may carry a national-security risk may be subject to review by the authorities. Chinese authorities believe they have the power to demand that the deal be unwound because Beijing Butterfly Effect Technology remains a Chinese company.

 

After the acquisition, Meta said that there would be no continuing Chinese ownership interest in Manus and that the startup would discontinue its China-based services and operations. Manus was working to close Beijing Butterfly Effect Technology, but hasn't yet done so.

 

The events that culminated in Meta's purchase of technology originating from China has angered Chinese regulators. They worry the steps would spur other Chinese companies to follow suit and move out of China without approval.

 

Manus executives had held talks with Meta about possibly resigning as a path to resolving Beijing's probe into the acquisition, people familiar with the matter said. Unwinding the deal would be complex because Manus's former investors have recovered their investment and Meta has integrated Manus's tools into some products, people familiar with the matter said.

 

Manus and Xiao didn't respond to requests to comment. Ji couldn't be reached to comment.

 

In recent weeks, Chinese regulators have told several of the country's AI companies not to accept U.S. capital without government approval, people familiar with the restriction said. That move, reported earlier by Bloomberg, broadens Beijing's efforts to tighten oversight of strategic technologies.

 

While the U.S. has restricted U.S. investors from funding frontier AI projects in China, U.S. dollars have continued to flow into Chinese AI startups.” [1]

 

Are Manus agents open source and still available to Americans after China unwinded Manus deal?

 

As of April 28, 2026, the $2 billion+ acquisition of the AI agent startup Manus by Meta has been ordered to be unwound by Chinese authorities, throwing its future availability in the US into uncertainty.

 

    Status of the Deal: China’s National Development and Reform Commission (NDRC) prohibited the acquisition, citing national security concerns because the technology and talent originated in China.

 

    Availability to Americans: While Manus was previously aiming to operate globally (with a Singapore headquarters) and had integrated into platforms like Telegram in early 2026, the forced unwinding likely severs its connection to Meta’s US-based ecosystem, aiming to keep the talent and technology under Chinese jurisdiction.

    Open Source Status: Manus is not traditionally open-source. It is a proprietary agent framework that was being integrated into Meta's products. While there are open-source alternatives (such as OpenManus), the original "Manus" product is a private, subscription-based "digital employee" service.

 

What's Happening Now:

 

    Unwinding Process: Meta is being forced to unwind the deal, meaning the company will likely revert to its status prior to the merger, under high scrutiny from Beijing.

 

    The "Open Source" Confusion: As of early 2025, there was buzz about "open-sourcing components," but the core product is proprietary. However, developers quickly created alternatives such as OpenManus on GitHub, which seek to replicate its capabilities.

 

    Future Availability: The crackdown suggests the technology will likely be retained within China's tech ecosystem, restricting its availability to US users, particularly those on Western platforms like Meta. 

 

1. China Bans Meta's Manus Purchase --- Decision reflects Beijing's attempts to help safeguard China's AI capabilities. Huang, Raffaele.  Wall Street Journal, Eastern edition; New York, N.Y.. 28 Apr 2026: B4