Meta reportedly moves to unwind $2B Manus deal after Beijing’s demand

Meta has begun unwinding its $2 billion acquisition of Manus, completing an operational separation of the China-founded AI startup and ending data sharing between the two companies. This is the most concrete step yet toward complying with a divestment order that Beijing issued about two months ago on national security grounds.

Meta has cut Manus off from his internal systems, Bloomberg reported, leaving employees unable to use Manus tools for internal projects as the two companies move towards a complete separation.

Meanwhile, according to May reportsManus co-founders have been in preliminary talks about raising about $1 billion from outside investors to reclaim the startup from Meta, a move that could pave the way for a Chinese joint venture structure and an eventual listing in Hong Kong, a location that has seen a surge in AI listings this year for Chinese AI startups like MiniMax and Zhipu.

What should have been a milestone for Chinese AI is quickly falling apart. The move underlines Beijing’s determination to maintain control over strategically sensitive technology regardless of a company’s offshore formation.

In addition to the forced divestiture, Chinese authorities have since extended travel restrictions to researchers and executives at private companies, requiring government approval before going abroad. China does It is also tightening its grip on foreign capitalwith reports indicating that top AI companies including Moonshot AI, StepFun and ByteDance will need government approval before accepting US investments, adding another layer to Beijing’s sweeping efforts to control its AI sector.

Even as Meta looks to cut ties with Manus, the agentic AI startup has continued to deliver new features and roll out integrations with Similarweb And Shopify.

Manus attracted widespread attention with a demo of a viral agent and moved its staff to Singapore in mid-2025 before announcing a $2 billion acquisition by Meta in December. Chinese regulators scrutinized the transaction earlier this year, citing possible violations of technology export controls and foreign investment rules.

Manus investors, including California-based venture capital firm Benchmark, have already received their proceeds from the acquisition, while Asian lenders including Tencent, HSG and ZhenFund have indicated they will participate in the resolution process, according to the WSJ.

Manus’ Chinese origins at parent company Butterfly Effect drew criticism on both sides of the Pacific, with Senator John Cornyn interrogate whether American capital should flow to a company linked to China.

Meta and Manus did not immediately respond to a request for comment outside regular business hours.