Meta begins unwinding $2B Manus acquisition after Beijing divestiture order

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Meta begins unwinding $2B Manus acquisition after Beijing divestiture order

Meta has begun dismantling its $2 billion acquisition of Manus, completing an operational separation from the Chinese-founded AI startup and halting data sharing between the two companies. This is the most concrete step yet toward complying with a divestiture order Beijing issued roughly two months ago on national security grounds.

Operational separation underway

Meta has cut Manus off from its internal systems, Bloomberg reported, preventing employees from using Manus tools for internal projects as the two companies move toward a full separation. The move follows a period of increasing regulatory pressure from Chinese authorities, who scrutinized the transaction earlier this year over potential violations of technology export controls and foreign investment rules.

Manus drew widespread attention with a viral agent demo in early 2025, relocated its staff to Singapore in mid-2025, and announced a $2 billion acquisition by Meta in December. The deal was initially seen as a landmark exit for Chinese AI talent, but regulatory pushback has reversed course.

Manus founders seek $1B buyback

According to May reports, the co-founders of Manus have held preliminary discussions about raising approximately $1 billion from outside investors to reclaim the startup from Meta. This move could pave the way for a Chinese joint venture structure and an eventual listing in Hong Kong, a venue that has seen a surge in AI listings this year for Chinese AI startups like MiniMax and Zhipu.

Manus investors, including California-based venture firm Benchmark, have already received their proceeds from the acquisition. Asian backers, including Tencent, HSG, and ZhenFund, have indicated they will cooperate with the unwinding process, according to the Wall Street Journal.

Broader regulatory tightening

In addition to the forced divestiture, Chinese authorities have since expanded travel restrictions to researchers and executives at private firms, requiring government approval before heading abroad. China is also tightening its grip on foreign capital, with reports indicating that top AI firms, including Moonshot AI, StepFun, and ByteDance, will need government sign-off before accepting U.S. investment.

The move underscores Beijing’s determination to retain control over strategically sensitive technology, regardless of a company’s offshore incorporation. Manus’ Chinese origins with parent company Butterfly Effect drew scrutiny on both sides of the Pacific, with Senator John Cornyn questioning whether American capital should flow to a Chinese-linked firm.

Manus continues shipping features

Even as Meta moves to sever ties, Manus has continued to ship new features, rolling out integrations with Similarweb and Shopify. The agentic AI startup appears to be maintaining operational momentum while navigating the complex unwinding process.

Conclusion

What was supposed to be a landmark exit for Chinese AI is quickly unraveling. The situation highlights the growing friction between cross-border technology investments and national security concerns, particularly in the AI sector. Meta and Manus did not immediately respond to requests for comment outside regular business hours.

FAQs

Q1: Why is Meta unwinding the Manus acquisition?
Beijing issued a divestiture order on national security grounds, citing potential violations of technology export controls and foreign investment rules. Meta is complying by cutting Manus off from its internal systems and halting data sharing.

Q2: What is Manus doing to regain independence?
Manus co-founders have held preliminary discussions about raising approximately $1 billion from outside investors to buy the startup back from Meta, potentially leading to a Chinese joint venture and a Hong Kong listing.

Q3: How are other Chinese AI firms affected by new regulations?
Chinese authorities have expanded travel restrictions for AI researchers and executives, and top AI firms like Moonshot AI, StepFun, and ByteDance will need government approval before accepting U.S. investment.

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