Meta has begun dismantling its $2 billion acquisition of Manus, an AI startup with Chinese origins, following a divestiture order from Beijing on national security grounds. The move signals China's determination to control strategically sensitive technology.
This situation highlights China's increasing assertiveness in controlling advanced technologies and foreign investment in strategic sectors, potentially impacting global AI development and cross-border tech deals.
Meta has initiated the process of dismantling its $2 billion acquisition of Manus, an AI startup with Chinese origins, in response to a divestiture order from Beijing. The tech giant has severed operational ties and halted data sharing with Manus, marking a significant step toward complying with the Chinese government's national security demands.
According to reports, Meta has cut Manus off from its internal systems, preventing employees from using the startup's tools. This move underscores Beijing's resolve to maintain control over strategically sensitive technologies, even from companies incorporated offshore.
Meanwhile, Manus' co-founders have reportedly held preliminary discussions about raising approximately $1 billion from outside investors to buy back the startup from Meta. Such a move could potentially lead to a Chinese joint venture structure and a future listing in Hong Kong, a market that has seen increased activity from Chinese AI startups.
The situation highlights the challenges faced by Chinese AI startups seeking international investment and exits. In addition to the forced divestiture, Chinese authorities have implemented stricter travel restrictions for researchers and executives and are tightening controls on foreign capital for top AI firms, requiring government approval for U.S. investments.
Despite the impending separation from Meta, Manus has continued to develop and release new features, including integrations with Similarweb and Shopify. The startup had previously gained attention for its agent demo and relocated its staff to Singapore before Meta announced the $2 billion acquisition in December. Chinese regulators began scrutinizing the transaction earlier this year, citing concerns over technology export controls and foreign investment rules.
Manus investors, including California-based Benchmark, have already received their acquisition proceeds. Asian backers such as Tencent, HSG, and ZhenFund have indicated their cooperation with the unwinding process. The startup's Chinese origins and its parent company, Butterfly Effect, had drawn scrutiny from U.S. officials regarding the flow of American capital to Chinese-linked firms.