Meta has begun dismantling its $2 billion acquisition of Manas, completed its separation from the Chinese-founded AI startup, and stopped data sharing between the two companies. This is the most concrete step yet towards compliance with a sale order issued by the Chinese government about two months ago on national security grounds.
According to a report from Bloomberg, Meta has cut Manus out of its internal systems, preventing employees from using Manus tools for internal projects as the two companies move toward complete separation.
Meanwhile, reports in May said Manas co-founders were in preliminary talks about raising about $1 billion from outside investors to take the startup back from Meta, which could pave the way for a joint venture structure in China and an eventual listing in Hong Kong. Hong Kong has seen a surge in AI listings from Chinese AI startups such as Minimax and Zipu this year.
What was supposed to be a breakthrough exit for Chinese AI is rapidly unraveling. The move underscores the Chinese government’s determination to maintain control over strategically sensitive technology, regardless of the company’s offshore incorporation.
In addition to the forced sale, Chinese authorities have since expanded travel restrictions for researchers and private company executives, requiring government approval before traveling abroad. China is also tightening its grip on foreign capital, with reports that top AI companies such as Moonshot AI, Stepfan and ByteDance will need government approval before accepting U.S. investment, adding another layer to the Chinese government’s broader efforts to control the AI sector.
Despite Meta’s move to sever ties with Manus, the agent AI startup continues to release new features and roll out integrations with Similarweb and Shopify.
Manas gained widespread attention for its viral agent demo and moved its staff to Singapore in mid-2025 before announcing a $2 billion acquisition by Meta in December. Earlier this year, Chinese regulators moved to scrutinize the deal for possible violations of technology export controls and foreign investment rules.
WSJ said Manas’ investors, including California-based venture firm Benchmark, have already received proceeds from the deal, while Asian backers including Tencent, HSG and Genfund have indicated they will cooperate in the unwinding process.
The Chinese origins of Mr. Manas’ parent company, Butterfly Effect, have drawn attention on both sides of the Pacific, with Sen. John Cornyn questioning whether U.S. capital should flow to Chinese-affiliated companies.
Mehta and Manus did not immediately respond to requests for comment outside of normal business hours.
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