China Forces Meta to Unwind $2B Manus Acquisition

Meta has initiated the dismantling of its $2 billion acquisition of Manus, an AI startup with Chinese origins, by completing an operational separation and ceasing data sharing. This action is in direct response to a divestiture order issued by Beijing approximately two months ago on national security grounds. The separation involves cutting Manus off from Meta's internal systems, preventing the use of Manus tools for internal projects.

Amidst these developments, the co-founders of Manus have reportedly engaged in preliminary discussions regarding a potential $1 billion investor round to reacquire the startup from Meta. Such a move could facilitate a Chinese joint venture structure and an eventual listing on the Hong Kong stock exchange. This situation highlights Beijing's stringent efforts to maintain control over strategically vital technology, irrespective of a company's offshore incorporation status.

Further underscoring China's tightened control, authorities have expanded travel restrictions for researchers and executives at private firms, requiring government approval for international travel. Additionally, Beijing is increasing its oversight of foreign investment in top AI firms, necessitating government sign-off before accepting U.S. capital. Despite Meta's move to sever ties, Manus has continued to release new features and integrations, including with Similarweb and Shopify. The acquisition, initially announced in December, had drawn scrutiny from Chinese regulators earlier this year concerning potential violations of technology export controls and foreign investment rules. Manus investors, including Benchmark, Tencent, HSG, and ZhenFund, have reportedly received their proceeds and are cooperating with the unwinding process.