Meta is dismantling its $2 billion acquisition of Chinese AI startup Manus following a directive from Chinese regulators, who ruled the deal violated foreign investment and technology export rules despite the company’s relocation to Singapore.
- Meta blocked Manus from accessing internal systems and is sunsetting the platform.
- Chinese regulators cited foreign investment and tech export violations despite Manus’ Singapore relocation.
- Manus founders aim to raise about $1 billion to buy back the company and pursue a joint venture structure.
What happened
In December 2025, Meta acquired Chinese-founded AI startup Manus for $2 billion. However, following a regulatory investigation, China’s National Development and Reform Commission (NDRC) ordered the deal to be unwound in April 2026. Since June, Manus has been effectively cut off from Meta’s internal data systems. Meta informed staff to migrate any projects away from Manus and discontinue new work on its platform as part of a sunsetting process.
The regulatory probe began immediately after the acquisition announcement and concluded that the transaction violated Chinese foreign investment and technology export rules. Despite Manus relocating its headquarters and key personnel to Singapore in 2025, Chinese authorities restricted the founders from leaving the country and summoned them for questioning, underscoring Beijing’s firm stance on outbound tech deals.
Why it matters
The Manus case highlights the risks of cross-border AI acquisitions involving Chinese technology companies, signaling stricter enforcement of outbound investment and tech export controls from China. This is an important precedent in the context of escalating regulatory scrutiny on foreign transactions involving Chinese tech assets.
The forced unwinding complicates the financial landscape, as investors such as Tencent and others have already received proceeds from the initial sale. It also presents operational challenges for Meta, which must now disentangle Manus from its internal systems while the startup attempts to maintain product development and customer connectivity.
What to watch next
The founders of Manus are actively exploring a $1 billion fundraising round to finance a buyback at a valuation matching Meta’s original $2 billion purchase price. This could lead to Manus restructuring as a Chinese joint venture with potential backing from Chinese investors and a future Hong Kong IPO, providing an alternative path to growth under domestic regulatory oversight.
Key issues to monitor include how completely Manus can sever ties with Meta given some integrations remain active, and whether the startup can sustain independent operation without access to Meta’s infrastructure. The trajectory of cross-border AI M&A deals involving China will also remain a critical focus amid evolving regulatory risks.