Meta has started reversing its $2 billion acquisition of AI startup Manus, marking a major shift in what was once expected to be a landmark deal in the artificial intelligence sector. The company has now begun fully separating its operations from the Chinese-founded startup, including cutting off data access and halting all system integration.
The decision follows pressure from Chinese authorities, who reportedly ordered Meta to divest its stake in Manus on national security grounds. The order, issued about two months ago, has now forced both companies into a structured breakup process.
As part of the separation, Meta has disconnected Manus from its internal tools and systems. This means Meta employees can no longer use Manus software or services for internal projects, effectively ending day-to-day collaboration between the two companies, according to Bloomberg.
The unwind represents the most significant step yet in complying with Beijing’s directive, and signals that the acquisition will not continue in its original form. What was once positioned as a major global AI partnership is now being dismantled under regulatory pressure.
Reports also suggest that Manus’ leadership is exploring ways to regain independence. In May, co-founders of the startup reportedly held early discussions with investors about raising around $1 billion in new funding. The goal would be to buy back control of the company and restructure it, possibly as a joint venture based in China.
There is also speculation that Manus could pursue a future listing in Hong Kong. The city has recently become a popular destination for AI-related public offerings, particularly for Chinese startups such as MiniMax and Zhipu, which have benefited from growing investor interest in the sector.
The collapse of the deal highlights China’s tightening control over sensitive technology industries. Authorities in Beijing have increasingly prioritized national security concerns, especially around artificial intelligence, data usage, and foreign investment in strategic companies.
Beyond this case, Chinese regulators have expanded oversight across the tech industry. New rules now require government approval for researchers and executives at private firms traveling abroad, adding another layer of control over international collaboration.
In addition, China is reportedly tightening restrictions on foreign capital entering its AI sector. Leading companies such as Moonshot AI, StepFun, and ByteDance are now said to require official approval before accepting U.S. investment, signaling a broader push to regulate external influence.
Despite the regulatory pressure, Manus has continued to operate and release new features. The company has recently introduced integrations with platforms such as Similarweb and Shopify, showing that development work is still ongoing even as ownership questions remain unresolved.
Manus first gained attention after a viral demonstration of its AI agent technology. The company later relocated parts of its workforce to Singapore in 2025 before Meta announced the $2 billion acquisition in December of the same year.
However, Chinese regulators began reviewing the deal earlier this year, raising concerns about technology export controls and foreign investment compliance. This scrutiny ultimately triggered the current unwind process.
Investors have already begun exiting the deal structure. According to reports, Manus backers including Benchmark have received payouts from the acquisition, while other investors such as Tencent, HSG, and ZhenFund have agreed to cooperate with the restructuring process.
The company’s ownership structure has drawn political attention in both the United States and China. U.S. lawmakers, including Senator John Cornyn, have questioned whether American capital should be involved in firms with Chinese ties, adding further scrutiny to the situation.
Meta and Manus have not publicly commented on the ongoing separation.
