Meta has reportedly begun dismantling its more than $2 billion acquisition of artificial intelligence startup Manus after Chinese regulators ordered the U.S. technology giant to unwind the deal.
According to a Bloomberg report, Meta has completed an operational separation from Manus and halted data sharing between the two companies as it works to comply with a directive issued by Chinese authorities. The move comes after Beijing reportedly ordered Meta to begin reversing the acquisition.
The dispute centers on Manus, an AI startup founded by Chinese entrepreneurs that later relocated its headquarters to Singapore. Meta acquired the company in late 2025 for more than $2 billion as part of CEO Mark Zuckerberg's push to strengthen the company's position in the race to develop advanced AI systems and autonomous AI agents.
China's National Development and Reform Commission (NDRC) ordered Meta in April to unwind the acquisition, arguing that the transaction raised national security concerns and represented an unacceptable transfer of Chinese AI talent and technology to a U.S. company.
Bloomberg had previously reported that Manus co-founders Xiao Hong, Ji Yichao and Zhang Tao were exploring ways to comply with Beijing's demands, including raising approximately $1 billion from outside investors to regain control of the company.
The unwinding process is expected to be complicated because Meta had already begun incorporating Manus technology and personnel into its broader AI strategy. Reports indicate that the company has now cut Manus off from its internal systems and stopped employees from using some Manus-developed tools as the separation proceeds.
Analysts told Reuters in April that Beijing's decision effectively established a new boundary around Chinese AI innovation, signaling that domestic talent and intellectual property in frontier technologies are unlikely to be allowed to move freely into the hands of American technology companies.
The repercussions are already spreading beyond Meta and Manus. The Financial Times reported this week that Chinese companies across several industries are rushing to dismantle offshore corporate structures known as "red-chip" arrangements, fearing heightened scrutiny from regulators after the Meta-Manus dispute. Companies ranging from AI startups to consumer brands are reportedly reconsidering overseas listing plans and exploring domestic or Hong Kong-based alternatives.
Beijing has also moved to tighten rules governing outbound investments and technology transfers. Reuters reported earlier this month that new regulations taking effect in July will give Chinese authorities broader powers to review, block, or reverse overseas transactions involving sensitive technologies, including artificial intelligence. The framework was widely viewed as a response to the controversy surrounding the Meta-Manus acquisition.
