A Forced Separation
Meta Platforms is moving to fully unwind its $2 billion acquisition of the Chinese-founded AI startup Manus, marking a significant reversal of a high-profile technology deal. The decision follows a directive from China’s National Development and Reform Commission (NDRC) in April, which ordered the parties to dissolve the transaction citing national security concerns and strict regulations on foreign investment.
As part of the separation process, Manus informed users on Tuesday that it will return to independent operations. The startup, which specializes in autonomous AI agents capable of executing internet-based tasks, has begun a data deletion protocol to comply with regulatory requirements. Affected users have been instructed to back up their data by August 22, with the deletion process scheduled to occur between August 23 and August 24.
The Regulatory Impasse
The acquisition, which was finalized in December 2025, aimed to integrate Manus’ agentic AI capabilities into Meta’s suite of consumer and enterprise products. However, the deal faced immediate scrutiny from Beijing. The startup, originally founded in China in 2022 as Butterfly Effect, had attempted to bypass capital and technology outflow restrictions by relocating to Singapore and scrubbing its Chinese online presence. These efforts failed to satisfy Chinese regulators, who launched a months-long investigation into the startup’s compliance with foreign investment laws.
The fallout has been severe for the company’s leadership. Manus co-founders Xiao Hong and Ji Yichao were reportedly required to appear before Chinese officials in Beijing in March and have since been prohibited from leaving the country. The operational separation has been ongoing for months, with Meta cutting off Manus staff from internal systems and barring its own employees from using Manus tools.
Future Path and Financial Stakes
The financial mechanics of the unwinding remain complex. Manus founders are reportedly exploring a buyback of the company at a valuation matching the original $2 billion price tag, potentially seeking $1 billion from external investors. Reports indicate that Chinese tech giant Tencent Holdings is in early-stage talks to potentially acquire a controlling stake in the independent entity, with other former investors including ZhenFund and HSG also involved in discussions.
Despite the setback, Meta continues to pursue its AI monetization strategy. Last week, the company released its first internal coding agent, signaling its intent to continue developing proprietary AI tools even without the Manus integration. For Manus, the path forward involves navigating the transition back to independence while managing the loss of Meta’s infrastructure and the ongoing scrutiny from Chinese authorities.