China's National Development and Reform Commission ordered Meta Platforms to unwind its $2 billion acquisition of AI startup Manus on Monday, marking a significant intervention in cross-border tech deals.

The National Development and Reform Commission, China's top economic planning body, issued a brief statement requiring the cancellation of the deal, citing national security concerns and violations of technology export rules. Manus, a Singapore-based company operated by Butterfly Effect Pte Ltd, develops autonomous AI agents capable of executing complex, multistep tasks independently. Founded by Chinese engineers including CEO Xiao Hong and co-founder Ji Yichao, the firm debuted its general-purpose AI agent in 2025 after shifting operations offshore from its Beijing and Wuhan offices.

Meta announced the acquisition in December 2025 as part of its push to bolster AI capabilities, with the deal reportedly valued at around $2 billion. By early 2026, Manus employees had joined Meta's AI team in Singapore, capital had been transferred, and the startup's website indicated integration with Meta. Meta had planned to sever Chinese ownership ties and shut down Manus operations in China to comply with regulations.

Scrutiny began in January 2026 when Chinese officials launched a probe into potential breaches of foreign investment and advanced technology export rules. In March, authorities barred co-founders Xiao Hong and Ji Yichao from leaving the country and met with Meta and Manus executives to voice concerns over the transaction. These steps signaled Beijing's determination to retain control over cutting-edge AI talent and intellectual property amid intensifying U.S.-China technological rivalry.

Meta has not issued a detailed public response to Monday's order, but earlier described the teams as "deeply integrated" and stated the transaction complied with applicable laws. The unwind process remains unclear given the advanced stage of integration, potentially complicating the reversal.

The block reflects China's broader efforts to curb outbound technology transfers and U.S. investments in sensitive sectors like AI, viewed as core to national security. Beijing has tightened reviews of offshore incorporations by Chinese founders, discouraging partnerships with American firms and making foreign funding harder to secure. This move arrives as both nations compete for AI dominance, with the U.S. imposing export controls on chips and China accelerating domestic development.

Industry observers see the decision as a warning to Chinese AI entrepreneurs against evading regulations through Singapore or other hubs, potentially slowing global talent flows in the sector.