<div id="readability-page-1"><div> Meta has begun dismantling 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 is the most concrete step yet toward complying with a divestiture order Beijing issued roughly two months ago on national security grounds. Meta has cut Manus off 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 reports, 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, a venue that has seen a surge in AI listings this year for Chinese AI startups like MiniMax and Zhiphu. What was supposed to be a landmark exit for Chinese AI is quickly unraveling. The move underscores Beijing’s determination to retain control over strategically sensitive technology, regardless of a company’s offshore incorporation. In addition to the forced divestiture, 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, adding another layer to Beijing’s sweeping effort to control its AI sector. 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 relocated 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, according to the WSJ. 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. </div></div>

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Meta is dismantling its $2 billion acquisition of AI startup Manus to comply with Beijing's national security divestiture order. The companies have halted data sharing and separated operations. Meanwhile, Manus co-founders are raising funds for a potential Chinese joint venture and Hong Kong listing. This move reflects China's tightening control over AI technology and foreign investment, alongside new travel restrictions for tech executives.

- Meta has initiated the dissolution of its $2 billion acquisition of Manus, effectively halting data sharing and cutting operational ties to comply with a divestiture order from Beijing.  
- The move signals China's strict control over sensitive technology and introduces new travel restrictions on researchers, alongside tighter oversight on foreign investment for AI firms.  
- Despite these challenges, Manus continues to develop new features and has discussions for securing external funding to potentially reclaim autonomy from Meta.

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Meta reportedly moves to unwind $2B Manus deal after Beijing’s demand