Meta Unwinds $2 Billion Manus AI Deal Following Beijing's National Security Demands

Meta has initiated the process of unwinding its significant $2 billion acquisition of Manus, a Chinese-founded AI startup, marking a pivotal moment in global tech deal-making. This move represents the most concrete step yet towards complying with a divestiture order issued by Beijing approximately two months ago, citing critical national security concerns. The operational separation has already begun, with Meta halting data sharing and severing Manus from its internal systems, preventing employees from utilizing Manus tools for internal projects as both entities move towards a complete and definitive separation. Adding another layer to this complex situation, reports from May indicate that the co-founders of Manus have engaged in preliminary discussions aimed at raising an estimated $1 billion from external investors. This capital injection would enable them to reclaim the startup from Meta, potentially paving the way for a new corporate structure, possibly a Chinese joint venture, and an eventual public listing in Hong Kong. The Hong Kong stock exchange has recently witnessed a surge in listings from Chinese AI startups, including prominent names like MiniMax and Zhipu, highlighting the region's growing appeal for such ventures. This dramatic unraveling of what was initially envisioned as a landmark exit for Chinese AI underscores Beijing's unwavering determination to maintain stringent control over strategically sensitive technological sectors, irrespective of a company's offshore incorporation. Beyond the forced divestiture, Chinese authorities have broadened travel restrictions for researchers and executives at private firms, mandating government approval for international travel. Furthermore, China is tightening its regulatory grip on foreign capital, with leading AI firms such as Moonshot AI, StepFun, and ByteDance now reportedly requiring government sign-off before accepting U.S. investments, reflecting Beijing's comprehensive strategy to assert dominance over its burgeoning AI industry. Despite the ongoing process of Meta severing ties, Manus, the agentic AI startup, has continued its development trajectory, actively shipping new features and rolling out integrations with platforms like Similarweb and Shopify. Manus first garnered widespread attention with a viral agent demo, leading to the relocation of its staff to Singapore in mid-2025, followed by Meta's $2 billion acquisition announcement in December. However, Chinese regulators swiftly moved to scrutinize the transaction earlier this year, raising concerns about potential violations of technology export controls and foreign investment regulations, which ultimately led to the current divestiture order. Regarding the financial implications, Manus investors, including the California-based venture firm Benchmark, have already received their proceeds from the initial acquisition. Meanwhile, Asian backers, notably Tencent, HSG, and ZhenFund, have reportedly expressed their cooperation with the unwinding process. The Chinese origins of Manus, particularly its connection to parent company Butterfly Effect, had drawn considerable scrutiny from both sides of the Pacific, with figures like Senator John Cornyn publicly questioning the appropriateness of American capital flowing into a Chinese-linked firm. Neither Meta nor Manus has provided immediate comments on these developments outside of regular business hours.