• China's move to block Meta’s $2 billion Manus deal comes ahead of the U.S.-China summit.
• Meta finds itself in a sticky situation as Manus employees have already moved to Meta’s offices.
• The Manus deal was expected to boost Meta’s AI efforts as it continues to hunt for talent and companies in the booming sector.

Meta Platforms’ (META) $2 billion acquisition of agentic AI startup Manus has hit a major obstacle after China decided to block the deal, citing laws and regulations, according to a report by Bloomberg on Monday. This development comes as it gears up to report earnings later this week. 

The report said China’s top state planner, the National Development and Reform Commission, ordered the cancellation of the deal, which is nearly complete, in a one-line statement without elaboration.

Why It Matters For Meta’s AI Push

The decision leaves Meta in limbo, which has been on an aggressive campaign to poach AI talent and snap up smaller rivals in the booming sector, and comes ahead of the U.S.-China summit in Beijing in mid-May.

Manus is a Singaporean firm, but its founders are from China. As part of the deal with Meta, Chinese ownership of the AI company was completely relinquished. 

Unwinding the deal will put Meta in a very difficult position, as some Manus employees have already joined Meta’s Singapore offices, and Manus investors, notably Tencent, ZhenFund, and Hongshan, have already pocketed their share of the proceeds from the stake sale, sources told Bloomberg.

Geopolitical Trade In The Spotlight 

China and the United States are racing to secure global leadership in artificial intelligence, and the geopolitical rivals are highly skeptical of each other, particularly regarding technology collaboration, due to heightened national security concerns, among other factors.

A recent example is the separation of TikTok USA from its Beijing-based parent, ByteDance, in which China ruled out the inclusion of its crucial recommendation algorithm, fearing duplication. At the same time, the U.S. rushed to protect the data of over 170 million citizens and move it back home from offshore servers to prevent hackers from stealing it.

META Stock: How Did Retail Traders React?

On Stocktwits, retail sentiment about META was ‘bearish’ over the last 24 hours, amid a 5.6% rise in messaging volumes.

However, with earnings expected this week on April 29, a bullish user on the platform flagged a disconnect between the stock’s valuation and the S&P 500.

Another user thinks the stock will be “ripping” soon beyond the $800 mark.

For Meta, the first quarter revenue estimate is $55.54 billion, and the EPS is $6.74, according to data from Fiscal AI.

META has underperformed the benchmark S&P index so far this year and over the past 12 months. 

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