Meta is set to reverse its $2 billion acquisition of Manus following China's prevention of the deal.

      Meta is getting ready to reverse its roughly $2 billion acquisition of the AI startup Manus following a formal cancellation order issued by China's National Development and Reform Commission (NDRC) on Monday, as reported by the Wall Street Journal, citing sources familiar with the situation.

      Beijing has given Meta and Manus a preliminary timeframe of several weeks to undo the deal and fully restore Manus’s assets in China to their original condition. At the time of publication, neither Meta nor Manus had publicly acknowledged their preparations to unwind the deal.

      The new information from the Journal is operationally important. The NDRC's cancellation order confirmed that China has formally prohibited the deal. Furthermore, Tuesday’s report indicates that this prohibition includes a specific compliance deadline and the required outcome: returning Manus’s Chinese assets to their state before the acquisition. This requirement is more precise and demanding than a mere cancellation order.

      It suggests that some elements of Manus, such as assets or operational framework, still legally exist in China and must be separated from Meta's ownership before the deadline lapses.

      Defining what "Chinese assets" means for a company incorporated in Singapore, primarily run by Singapore-based founders, will be a matter that lawyers for both Meta and Manus will need to clarify over the next several weeks under Chinese regulatory oversight.

      The situation is significant in terms of setting a broader precedent. China's push to undo a completed deal involving a company that had legally moved to Singapore is unprecedented.

      The NDRC’s claim of jurisdiction relies on the argument that Manus, despite being incorporated in Singapore, maintained enough ties to China—via its founders, its research origins, its data, or its institutional knowledge—to fall under Chinese foreign investment security review. If this claim goes unchallenged legally, it will serve as a precedent for future cases involving Chinese-founded AI companies incorporated abroad looking to be acquired by U.S. companies.

      The lack of a detailed legal justification signals that China is asserting its right to block such transactions without setting a public precedent that could withstand international arbitration challenges. The NDRC's brief statement, “prohibit foreign investment in the Manus project in accordance with laws and regulations," is succinct enough to achieve this outcome without providing a basis for challenge.

      For Meta, the operational implications are unfolding swiftly. The company invested around $2 billion for an AI team and technology that it will now need to return in some manner that satisfies Chinese regulatory authorities.

      While the financial loss is manageable—Meta has $70 billion in cash and can absorb the write-down—the strategic impact is less predictable. Meta had viewed Manus as a key acquisition for building its AI capabilities, which are vital for its AI product roadmap for 2026 and 2027.

      Whether it is possible to re-establish Manus’s technology, platform, or team outside the reach of China’s regulations, either in Singapore or the U.S., while fulfilling the NDRC's requirements and maintaining Meta's access to the acquired capabilities, will be determined in the upcoming weeks.