The Chinese government today ordered Meta Platforms Inc. to scrap its acquisition of artificial intelligence startup Manus.

The development comes about five months after the Facebook parent announced the deal. The transaction was reportedly valued between $2 billion and $3 billion.

Manus develops an AI agent that can turn financial datasets into presentations, generate websites and perform other multistep tasks. A Chrome extension enables it to interact with webpages. Under the hood, the agent is powered by large language models from external providers such as Anthropic PBC.

Manus is the brainchild of a startup called Butterfly Effect that was founded in China about four years ago. The company released Manus last March and raised a $75 million funding round a few weeks later. Around the same time, the Manus team moved from China to Singapore.

The company quickly took off after its release. When Meta announced the acquisition in December, Butterfly Effect disclosed that its annualized recurring revenue from the AI agent had topped $100 million. It also claimed it had millions of users. 

Manus drew not only broad consumer interest but also regulatory scrutiny. Last May, the U.S. Treasury Department started looking into whether the $75 million funding round that Manus had closed a few weeks earlier breached financial regulations. The investment was led by San Francisco-based venture capital firm Benchmark.

This past January, Chinese regulators launched an investigation into Meta’s acquisition of Manus. The review reportedly focused on whether the deal complied with export controls and overseas investment rules.

It’s unclear how today’s regulatory decision will affect Meta’s AI development roadmap. Last December, the company stated that it was planning to integrate Manus into its products.

Meta doesn’t yet offer any services that can perform the kind of multistep tasks Manus is designed to automate. However, it has recently started integrating AI agents into its product portfolio. The most prominent example is the Contemplating mode of Muse Spark, Meta’s newest LLM. When the feature is enabled, the model uses a collection of research subagents to answer user questions.

The Manus acquisition is one of at least a half-dozen startup deals that Meta has inked in the past year.

In March, the company bought the developer of Moltbook, a social network built for AI agents. A few days later, Meta hired the employees of consumer AI provider Dreamer. The startup developed a platform that enables users to create custom agents without writing code. 

Photo: Wikimedia Commons