For creators and audio engineers, the ripple effect is immediate: the tools that once promised autonomous workflow automation are now navigating a geopolitical minefield. Meta has started dismantling its $2 billion purchase of Manus, effectively severing operational ties with the Beijing-founded AI startup and stopping all data exchange between the two entities. This marks the most tangible action yet to comply with a divestiture mandate issued by Beijing roughly two months ago, citing national security concerns.
The operational split
As Bloomberg reported, Meta has isolated Manus from its internal infrastructure. Employees are no longer permitted to utilise Manus tools for internal work as the companies proceed toward a complete separation.
Founders seek a new path
According to reports from May, Manus co-founders have initiated preliminary talks to secure approximately $1 billion from external investors. The goal is to reclaim the startup from Meta, potentially establishing a Chinese joint venture structure and pursuing a listing in Hong Kong. This venue has recently seen a surge in AI IPOs for Chinese firms such as MiniMax and Zhipu.
What was intended as a landmark exit for Chinese artificial intelligence is rapidly falling apart. The situation highlights Beijing’s resolve to maintain control over strategically sensitive technology, irrespective of where a company is incorporated offshore.
A tightening grip on the sector
Beyond the forced divestiture, Chinese authorities have broadened travel restrictions for researchers and executives at private firms, mandating government approval before international travel. There are also indications that top AI companies, including Moonshot AI, StepFun, and ByteDance, must obtain government sign-off before accepting U.S. investment. These measures add another layer to Beijing’s comprehensive effort to regulate its AI industry.
Despite the fallout, Manus continues to release new features, having recently launched integrations with Similarweb and Shopify.
Context of the collapse
Manus initially gained traction with a viral demonstration in mid-2025, where an agent relocated staff to Singapore. This was followed by a December announcement of the $2 billion acquisition by Meta. Earlier this year, Chinese regulators scrutinised the deal, alleging violations of technology export controls and foreign investment regulations.
Investors from the original round have begun to see returns. California-based venture firm Benchmark has received its proceeds, while Asian backers including Tencent, HSG, and ZhenFund have stated they will cooperate with the unwinding process, according to the Wall Street Journal.
The startup’s Chinese roots, linked to parent company Butterfly Effect, attracted scrutiny from both sides of the Pacific. U.S. Senator John Cornyn specifically questioned whether American capital should flow to a firm with Chinese connections.
Neither Meta nor Manus responded to requests for comment outside standard business hours.
Key takeaways
- Meta is actively dismantling its $2 billion Manus acquisition, halting data sharing and cutting off internal tool access to comply with Beijing’s divestiture order.
- Manus co-founders are reportedly seeking $1 billion in external funding to facilitate a Hong Kong listing and a potential Chinese joint venture structure.
- Chinese regulators are simultaneously expanding travel restrictions for tech executives and tightening controls on foreign capital for major AI firms like Moonshot AI and ByteDance.
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