Meta forced to divest $2 billion Manus startup following Beijing's demand

Meta Corporation has initiated the process of unwinding its $2 billion acquisition of AI startup Manus, complying with demands from the Chinese government citing national security concerns. This decision highlights Beijing's firm stance on maintaining control over strategic technologies and has altered the fate of a major deal in the global tech market, reports Techcrunch.com reports .

According to Bloomberg, Meta has already severed operational ties with Manus and halted data sharing. Employees have been restricted from using Manus tools in internal projects. These steps are seen as the most concrete actions toward fulfilling the divestiture order issued by Beijing two months ago.

Beijing's struggle for technological sovereignty

Manus is known for its agentic AI systems and was originally founded in China as Butterfly Effect. Although the startup later moved its staff to Singapore and reached a $2 billion deal with Meta in December, Chinese regulators deemed the transaction in violation of technology export and foreign investment rules.

The complexity of the situation lies in the fact that the Chinese government not only blocked the deal but also tightened travel restrictions for private sector researchers and executives. Industry experts are now required to obtain special government permission before traveling abroad. Such measures signal Beijing's intent to maintain full control over the strategically vital AI sector.

Future plans and investment issues

Manus founders are currently negotiating to raise approximately $1 billion from external investors to exit Meta and restore independence. The plan involves reorganizing the startup as a Chinese joint venture and potentially launching an IPO on the Hong Kong Stock Exchange in the future. Many Chinese AI startups, such as MiniMax and Zhipu, have chosen this path this year.

According to WSJ, investor reactions to this process vary:

• California-based Benchmark venture fund has already accepted the funds from the deal;
• Asian investors such as Tencent, HSG, and ZhenFund have expressed readiness to cooperate in the deal cancellation process;
• Politicians like US Senator John Cornyn are questioning whether the flow of American capital into firms linked to China is appropriate from a security perspective.

Meta and Manus have so far refrained from providing official comments on the situation. However, despite the severed ties with Meta, Manus continues to develop its products. The startup recently announced new integrations with Similarweb and Shopify platforms. This event once again proves how complex and risky it is for global tech giants to acquire assets linked to China.