Meta has begun unwinding its $2 billion acquisition of Manus, completing a business separation from the Chinese artificial intelligence startup and ceasing data sharing between the two companies. This is the most concrete step yet toward complying with a divestiture order issued by Beijing about two months ago on national security grounds.
Meta has cut off Manus from its internal systems, Bloomberg reported, preventing employees from using Manus tools for internal projects as the two companies move toward a full separation.
Meanwhile, according to May exhibitionsManus’ co-founders have held preliminary discussions about raising about $1 billion from outside investors to take the startup back from Meta, a move that could pave the way for a Chinese joint venture and an eventual listing in Hong Kong, a space that has seen a surge in AI listings this year for Chinese AI startups such as MiniMax and Zhipu.
What was supposed to be a landmark exit for Chinese AI is quickly unraveling. The move underscores Beijing’s determination to retain control of strategically sensitive technology regardless of a company’s offshore establishment.
In addition to the forced handover, Chinese authorities have since expanded travel restrictions on researchers and private company executives, requiring government approval before they go abroad. China is it also tightens controls on foreign capitalwith reports indicating that leading artificial intelligence companies including Moonshot AI, StepFun and ByteDance will need government sign-off before accepting US investment, adding another layer to Beijing’s sweeping effort to control the artificial intelligence sector.
Even as Meta moves to sever ties with Manus, the AI startup has continued to deliver new features, developing integrations with Similar Web and Shopify.
Manus gained attention with a viral agent demo that moved its staff to Singapore in mid-2025 before announcing its $2 billion acquisition of Meta in December. Chinese regulators scrutinized the transaction earlier this year, citing potential violations of technology export controls and foreign investment rules.
Manus’ investors, including California-based venture capital firm Benchmark, have already received their takeover proceeds, while Asian backers including Tencent, HSG and ZhenFund have said they will cooperate in the spin-off process, according to the WSJ.
Manus’ Chinese parent company Butterfly Effect has drawn scrutiny on both sides of the Pacific, with Sen. John Cornyn reflection if US funds should flow into a China-linked company.
Meta and Manus did not immediately respond to a request for comment outside regular hours.
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