Meta unwinds $2B Manus deal amid Beijing's national security concerns

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Meta has started to dismantle 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 move is the most concrete step yet toward complying with a divestiture order issued by Beijing roughly two months ago on national security grounds. Meta has cut Manus off from its internal systems, preventing employees from using Manus tools for internal projects as the two companies move toward a full separation.

The co-founders of Manus have held preliminary discussions about raising approximately $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. This comes as Hong Kong has seen a surge in AI listings this year for Chinese AI startups like MiniMax and Zhipu. The forced divestiture underscores Beijing's determination to retain control over strategically sensitive technology, regardless of a company's offshore incorporation.

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.

Even as Meta moves to sever ties with Manus, the agentic AI startup has continued to ship new features, rolling out integrations with Similarweb and Shopify. Manus drew widespread attention with a viral agent demo, relocating its staff to Singapore in mid-2025 before announcing a $2 billion acquisition by Meta in December. Chinese regulators moved to scrutinize the transaction earlier this year, citing potential violations of technology export controls and foreign investment rules.

Manus investors, including California-based venture firm Benchmark, have already received their proceeds from the acquisition, while Asian backers, including Tencent, HSG, and ZhenFund, have indicated they will cooperate with the unwinding process. 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. Meta and Manus did not immediately respond to a request for comment outside regular business hours.

Why this matters: The unwinding of Meta's acquisition of Manus has significant implications for the AI industry, particularly in the context of growing tensions between the US and China. This move highlights Beijing's increasing scrutiny of foreign investments in sensitive technologies, and its determination to retain control over key sectors. For developers and businesses, this means that due diligence on partners and investors will need to be more thorough, especially when dealing with AI technologies.