In a major development highlighting rising geopolitical tensions in the technology sector, China has blocked U.S.-based Meta Platforms from acquiring artificial intelligence startup Manus in a deal valued at around $2 billion. The decision, announced by China’s top economic regulator, marks one of the strongest interventions yet in cross-border AI investments and signals a tightening grip over strategic technologies.

The Chinese government cited national security concerns as the primary reason for halting the acquisition. Authorities expressed fears that allowing foreign ownership could lead to the transfer of sensitive AI technology and intellectual property outside the country. The regulator has ordered both parties to unwind the transaction, despite the deal having already progressed significantly.

Founded by Chinese entrepreneurs and later relocated to Singapore, Manus had developed advanced autonomous AI agents capable of performing complex tasks such as planning, research, and customer service. The company was seen as a strategic asset in the global AI race, making it an attractive target for Meta, which aims to expand its AI capabilities across platforms like social media and enterprise tools.

Reports indicate that Chinese authorities had already begun scrutinizing the deal months earlier, including questioning company founders and imposing restrictions on their movement. This reflects Beijing’s increasing vigilance over domestic tech firms, even those that relocate overseas, to prevent foreign control of critical innovation.

The move comes amid intensifying competition between the United States and China for dominance in artificial intelligence. Both nations are implementing stricter policies to protect their technological ecosystems, leading to a growing fragmentation of the global tech landscape. Analysts believe this case could set a precedent, making national security reviews a standard requirement for future cross-border AI deals.

For Meta, the decision represents a setback in its ambition to become an “AI-first” company, as the Manus acquisition was expected to accelerate its development of next-generation AI tools. More broadly, the incident highlights how geopolitical factors are increasingly shaping the future of global technology investments, where innovation alone is no longer enough—regulatory approval and national interests now play a decisive role.