Manus, the general-purpose AI agent startup built by Butterfly Effect Technology, will “soon return to operating as an independent company” after Chinese regulators ordered Meta Platforms to unwind its roughly $2 billion acquisition of the business, the company told users this week.
Beijing's Firewall Wins
Meta announced the deal in December 2025, positioning Manus as a wedge into consumer AI agents against OpenAI's ChatGPT and Anthropic's Claude. In April, China's National Development and Reform Commission ordered the transaction unwound, arguing that offshore incorporation — Manus operates out of Singapore under Butterfly Effect Pte Ltd — does not shield a deal from Beijing's jurisdiction when the underlying technology and talent originated in China. Co-founders Xiao Hong and Ji Yichao were required to appear before Chinese officials in March and have been prohibited from traveling abroad since.
Data Deletion And Separation
Manus said it will delete data generated by “certain users” on or after December 29 — the date the acquisition closed — as part of the transition. Meta had shared tools and data with the startup after signing, but the company said it has since “erected an internal firewall” as the deal winds down. Manus's flagship product is an autonomous agent that plans and executes multi-step digital work — market research, data analysis, code generation, web browsing — with minimal human oversight, and it viral-launched in March 2025.
Precedent For Cross-Border AI M&A
China watchers are calling this the sharpest test yet of what critics dubbed “Singapore washing” — the practice of routing Chinese AI startups through offshore holding companies to attract foreign capital. The NDRC's order makes clear those structures no longer insulate deals from Chinese approval when the tech and team originated on the mainland. Meta joins a growing list of US firms navigating tighter Chinese scrutiny of frontier AI even as it expands its own enterprise-AI footprint at home.
Reporting based on coverage from Bloomberg, CNBC, TechCrunch and the South China Morning Post.