Meta's acquisition of Manus: Detailed path to withdrawal — $2 billion must be refunded, data must be isolated and deleted

Source: AI Reeps

AIPress.com.cn Report

April 27 News, the Office of the Foreign Investment Security Review Mechanism of the National Development and Reform Commission officially made a prohibition decision on the investment, halting Meta’s acquisition of AI intelligent company Manus.

This transaction, once considered Meta’s third-largest acquisition in history, was announced in December 2025 and banned in April 2026, lasting only four months.

Key Timeline of the Manus Acquisition

Last March, Manus was officially launched. Monica.im team released the world’s first general-purpose AI intelligent agent, which immediately sparked the market, with invitation code prices soaring, and annualized revenue quickly surpassing $125 million.

On December 30 last year, Meta announced the acquisition of Manus’s parent company Butterfly Effect for $3-5 billion, with negotiations lasting just over ten days, and founder Xiao Hong appointed as Meta Vice President.

On January 8, regulators launched an investigation, with the Ministry of Commerce and relevant departments conducting assessments on technology exports, cross-border data, foreign investment declarations, and other compliance issues.

In March, the National Development and Reform Commission held talks with senior executives from both sides, pointing out risks related to technology transfer and data security, and requiring a suspension of progress.

On April 27, the Office of the Foreign Investment Security Review Mechanism officially prohibited the transaction, demanding the cancellation of the acquisition and restoring the original state.

Canceling the Deal: Full Restoration from Equity to Data

According to Article 12 of the Measures for the Security Review of Foreign Investment, after the state makes a prohibition decision, the core requirement is to restore the situation to the state before the investment was implemented within a specified period, eliminating any impact on national security. This is specifically divided into three modules:

(1) Equity and Transaction Subject Level

All parties sign written termination agreements, cancel the acquisition, and terminate all supporting documents (shareholder agreements, technology transfer agreements, etc.).

If Meta has completed the equity transfer, it must transfer all Manus shares back to the original shareholders/domestic entities, completing industrial and overseas entity registration changes.

Regulatory authorities will supervise the equity changes to ensure no “indirect control” (such as contractual control, nominee holding, etc.).

(2) Funds and Return of Consideration

Meta must fully refund approximately $2 billion (including deposits, prepayments, etc.) paid into transaction-related accounts.

After the original shareholders receive the funds, they must complete foreign exchange repatriation and declaration to foreign exchange regulatory authorities as required.

Intermediary fees, penalties, and other costs involved in the process must not be disguised as “compensation” or “consulting fees” to pay consideration.

Foreign exchange management departments will track the fund flow throughout to prevent capital flight under the guise of “terminating the transaction.”

(3) Data and Technical Security

Data Isolation and Deletion:

Meta must delete all domestic user data, training data, and business data obtained from Manus, provide deletion certificates, and accept verification; Manus must restore data localization storage and terminate all cross-border data transfer channels.

Technical and Code Restoration:

Terminate all technical licensing and code transfer agreements with Meta, recover control of core AI technology and algorithm models, prohibit Meta from using any Manus technological成果; all transferred technical documents and code copies must be destroyed.

Personnel and Management Isolation:

Meta’s dispatched management and technical personnel must be fully withdrawn, all control-related management agreements terminated, ensuring the domestic entity’s complete autonomous management.

Core Reasons: Crossing Three Red Lines

1. Technology and Data Security

Manus’s core technology was developed domestically by a Chinese team. During the transaction, the main structure was moved to Singapore, prompting regulatory scrutiny over whether there was “whitewashing” of technology or evasion of Chinese technology export controls. Core algorithms, training data, and user data may have flowed overseas through the acquisition, directly threatening data sovereignty and technological security.

2. Foreign Investment Merger Compliance Loopholes

This “American company acquiring a Singaporean enterprise” transaction essentially involves Chinese domestic AI technology being acquired by foreign capital through overseas entities, without completing China’s foreign investment security review procedures. Regulatory authorities have identified this as a typical “cross-border merger bypassing review.”

3. Structural Reorganization to Evade Regulation

The Measures for the Security Review of Foreign Investment explicitly require that foreign acquisitions involving key technologies and data must be declared for security review. Manus attempted to transfer control through a “domestic R&D + overseas shell change + foreign acquisition” route, and unreported transactions were deemed invalid.

Regulatory Supervision and Follow-up Constraints

Parties involved must complete all the above operations within the deadlines set by regulatory authorities. The working mechanism office will coordinate with the Development and Reform Commission, Ministry of Commerce, Cyberspace Administration, and foreign exchange departments for on-site verification to confirm that the transaction has been fully restored to its original state.

Failure to comply with the cancellation requirements may result in penalties such as fines, restrictions on domestic operations, or bans on foreign investment activities for relevant entities, with responsible persons also liable under law.

More importantly, Manus and its original shareholders must follow legal procedures for any future cross-border cooperation, financing activities, foreign investment security reviews, and data export safety assessments, avoiding circumvention of review procedures to transfer control, data, or technology overseas.

AI Cross-Border Mergers and Acquisitions No Longer Have Gray Areas

This prohibition decision is not targeted at a single case but clearly delineates boundaries for the AI industry:

It explicitly bans “domestic R&D + overseas shell change + foreign acquisition” transfer paths; cross-border AI mergers and acquisitions must undergo complete security review and data assessment procedures; AI technologies developed domestically in China must not have their control transferred overseas without review.

For Meta, the termination of the acquisition plan means missing out on key AI agent technology assets, and paid funds must be fully refunded; for the Manus team, it requires restoring control to the domestic entity, terminating all cooperation with Meta, and returning to compliant domestic operations.