Meta has started dismantling its $2 billion acquisition of AI startup Manus, cutting the company off from its internal systems and halting data sharing between the two organizations. The move, reported in June 2026, marks the most concrete step yet toward complying with a divestiture order Beijing issued roughly two months ago on national security grounds.
Meta has blocked employees from using Manus tools for internal projects as the two companies move toward a full separation, according to Bloomberg. Chinese regulators moved to scrutinize the transaction earlier this year, citing potential violations of technology export controls and foreign investment rules.
Manus, which was founded in China under parent company Butterfly Effect, relocated its staff to Singapore in mid-2025 before Meta announced the $2 billion acquisition in December 2025. The deal drew scrutiny on both sides of the Pacific, with U.S. Senator John Cornyn questioning whether American capital should flow to a Chinese-linked firm.
The co-founders of Manus have held preliminary discussions about raising approximately $1 billion from outside investors to reclaim the startup from Meta, according to May reports. That move 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 from Chinese startups including MiniMax and Zhipu.
Manus investors, including California-based venture firm Benchmark, have already received their acquisition proceeds. Asian backers — including Tencent, HSG, and ZhenFund — have indicated they will cooperate with the unwinding process, according to the Wall Street Journal.
Beijing’s actions extend beyond the Manus deal. Chinese authorities have expanded travel restrictions on researchers and executives at private firms, requiring government approval before they travel abroad. Reports also indicate that top AI firms — including Moonshot AI, StepFun, and ByteDance — will need government sign-off before accepting U.S. investment.
Despite the divestiture proceedings, Manus has continued releasing new features, including integrations with Similarweb and Shopify. Meta and Manus did not respond to requests for comment.
Source: TechCrunch