China has officially blocked Meta Platforms Inc. from acquiring AI startup Manus, citing regulatory concerns amid rising tech tensions between China and the United States.

The proposed deal, first announced in December, involved Manus, an AI agent developed by startup Butterfly Effect. However, China’s National Development and Reform Commission said Monday it would prohibit the foreign acquisition and ordered both parties to withdraw the transaction.

Reports had earlier suggested that Manus co-founders Xiao Hong and Ji Yichao were prevented from leaving China during a regulatory review.

Meta had said the acquisition would help bring advanced AI tools to billions of users across its platforms. Analysts estimated the deal could be worth over $2 billion.

Manus is known for AI capabilities such as summarising resumes, analysing stocks, and building websites automatically.

The decision reflects China’s increasing scrutiny of foreign involvement in strategic technology sectors, especially artificial intelligence.