China Seeks to Block Meta from Acquiring AI Startup Amid Regulatory Concerns

China has said it is moving to block a US tech giant from going ahead with the acquisition of an artificial intelligence startup, citing regulatory concerns.

According to a news report by Al Jazeera, the decision was announced on Monday by China’s National Development and Reform Commission (NDRC). The commission stated that it is prohibiting the foreign acquisition of the AI startup, though it did not name the US company involved. The US firm has been identified as Meta based on its public response.

China Blocks AI Deal:

The startup in question is Manus, an AI company with Chinese origins but currently based in Singapore. Manus develops general-purpose artificial intelligence agents that are designed to complete complex tasks with little human input. The firm is considered part of the growing field of advanced AI technologies.

According to the NDRC, the action has been taken in accordance with Chinese laws and regulations. However, the statement did not provide detailed reasons for blocking the deal, nor did it explain the exact legal process that would be used to undo or halt the transaction.

Meta, which is headquartered in California, responded by saying the deal had fully complied with all relevant laws. The company also said it expects the matter to be resolved appropriately following the Chinese announcement.

The White House also commented on the situation. A spokesperson for the Trump administration said that the United States would continue to support its technology sector and protect it from what it described as undue foreign interference.

Meta had first revealed its plan to acquire Manus in December. The deal was described as an unusual case of a major US technology company purchasing an AI firm with strong links to China. It was expected to strengthen Meta’s artificial intelligence products across its platforms.

Under the terms announced earlier, Meta stated that there would be no ongoing Chinese ownership in Manus after the deal. It also said that Manus would end its services and operations within China once the acquisition was completed.

The transaction had already attracted attention from regulators earlier this year. In January, Chinese authorities confirmed that they were examining whether the acquisition met legal and regulatory requirements, marking the beginning of official scrutiny.

Regulatory Pressures Increase:

Before the dispute escalated, Manus had already undergone major changes. Following a $75 million funding round led by US venture firm Benchmark in May 2025, the company closed its operations in China and laid off a number of employees. It later shifted its base to Singapore.

The restructuring led to Manus’s parent company, Butterfly Effect, being incorporated in Singapore. This move was seen as a way to navigate both US restrictions on Chinese AI firms and Chinese rules governing the movement of AI related technology and capital abroad.

China’s latest action adds to rising tensions over artificial intelligence investments and cross-border technology deals.