By Peter Landers

SINGAPORE -- China has told two co-founders of artificial-intelligence startup Manus not to leave the country while authorities review the company's $2.5 billion sale to Meta Platforms, people familiar with the matter said.

Earlier this month, Manus's Xiao Hong and Ji Yichao were called in for a meeting with officials from the National Development and Reform Commission in Beijing to discuss the acquisition, the people said. Officials later told the two Singapore-based executives not to leave China until receiving further instructions because the review is ongoing, the people said, describing the message as guidance rather than a formal exit ban.

Manus develops an AI agent that can carry out sophisticated tasks such as writing in-depth research reports and preparing presentation slides. Early versions of Manus were created by engineers at Beijing Butterfly Effect Technology, which Xiao founded in 2022, and many of the company's top people including Xiao are Chinese citizens.

Subsequently, a Singapore-based entity, also called Butterfly Effect, took over operation of the AI agent product in markets outside China. Last year, Manus relocated most of its China-based employees to Singapore.

The series of events that culminated in a U.S. company's purchase of China-originated technology has angered Beijing regulators. They are concerned Manus's moves would encourage other Chinese companies to follow suit and move out of China without Beijing's vetting.

Chinese regulators are considering potential penalties against Beijing Butterfly Effect Technology and key Manus executives, the people familiar with the matter said. Since January, Beijing has been reviewing the deal, saying that cross-border acquisitions and the export of technology must comply with the law.

Xiao still owned 28% of the Beijing entity as of early 2025, according to the Chinese corporate registry. Chinese officials are looking into whether the company properly reported its ownership changes and relocation of operations to Singapore, as well as whether the changes posed risks to user data, people familiar with the matter said.

Meta has said that there would be no continuing Chinese ownership interest in Manus after the acquisition and that the startup would discontinue its services and operations in China. Meta said Manus's team has been integrated into the U.S. company.

"The transaction complied fully with applicable law," a Meta representative said. "We anticipate an appropriate resolution to the inquiry."

The New York Times and Financial Times earlier reported the travel restriction and the meeting between Manus and Chinese officials.

Write to Peter Landers at Peter.Landers@wsj.com

(END) Dow Jones Newswires

March 25, 2026 07:12 ET (11:12 GMT)

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