China Blocked Meta's Manus AI Deal. Now Tencent Is Stepping In.

Tencent is in talks to invest in Manus, the Chinese-founded AI startup whose abrupt pivot to Singapore and partnership with Meta triggered a national security review from Beijing earlier this year.

The deal, however, isn’t quite the straightforward acquisition it’s been framed as. People close to the transaction say the equity restructuring is being directed by regulators — social capital is pooling together to buy out Meta’s stake, effectively pushing the US company out. Once the changes go through, Tencent will hold only a minority position as an external shareholder, according to sources cited by financial outlet Crain.

Manus exploded onto the scene in March 2025 as a product from Butterfly Effect, a Chinese AI startup. Within weeks, it became one of the most talked-about AI tools in China — a autonomous agent that could handle complex tasks without constant human prompting.

Then came the whiplash. By June of that year, Manus had relocated its headquarters to Singapore, laid off most of its China-based team, and stopped serving Chinese users entirely. The company, built on Chinese engineering talent and infrastructure, had effectively cut ties with its home country after securing American investment.

The move didn’t go unnoticed in Beijing. In April, China’s national security review office — the Foreign Investment Security Review Working Mechanism — formally blocked the Meta-backed acquisition of Manus, ruling that the deal violated national security regulations. State broadcaster CCTV framed the decision as a crackdown on “shower-style internationalization” — the practice of Chinese companies washing away their domestic identity after taking foreign money.

Now Tencent is the designated replacement. But the messaging is deliberate: Tencent won’t be a controlling shareholder, won’t get special privileges, and won’t be seen as the new “American” owner of a sensitive AI asset. The stake is structured to signal that Manus remains under the umbrella of Chinese regulatory oversight, not corporate control.

The saga highlights a recurring tension in China’s AI sector. Startups that rely on Chinese R&D talent and infrastructure often find themselves caught between global capital markets and Beijing’s increasingly assertive national security framework. Manus built its technology in China, raised money from the US, and tried to sit somewhere in between. The middle ground, it turns out, isn’t an option anymore.