It was meant to be Meta’s entry into the agentic AI race. Instead, the $2 billion acquisition of Manus has turned into a slow unraveling, involving six months of delays, two exit bans, and a direct order from Beijing to complete the deal.
Now Meta is actively dismantling the acquisition after Beijing ordered the deal to be reversed. Manus, on the other hand, is scrambling to raise $1 billion to buy the company back from Meta, with a Hong Kong listing as the likely end destination.
For Meta, $2 billion and 6 months of effort have produced nothing, so how did it all unravel?
It all started in late December 2025 when Meta announced it had acquired Manus, a Singapore-based AI startup founded in China by Xiao Hong in 2022.
The pitch was simple since Manus built autonomous AI agents capable of handling complex research, coding, and workflow tasks with minimal human input, and it had reached $100 million in recurring revenue, making it one of the fastest startups to reach that milestone.
For Meta, still playing catch-up in AI after its metaverse detour, this was an accelerator, not just an acquisition.
Chinese authorities, however, launched a formal review of the deal under export control and technology transfer rules within weeks of the announcement. The concern was not just the technology itself, but how Manus had structured itself ahead of the deal.
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Throughout 2025, Manus wound down its Chinese operations, relocated headquarters to Singapore, and swapped state-linked investors for US venture capital, a move regulators referred to as “Singapore-washing,” the same term applied to TikTok’s corporate restructuring.
Although Meta maintained there would be no continuing Chinese ownership or operations in China, Beijing’s position was that the technology was developed in China; hence, they retained a say over where it went.
In March, Manus CEO Xiao Hong and Chief Scientist Ji Yichao were both barred from leaving mainland China. This was following questioning sessions in Beijing where authorities focused on how Manus restructured itself ahead of the Meta deal.
The specific concern was China’s Regulations on Technology Import and Export Administration, which requires government sign-off for transferring certain categories of technology developed in China, with advanced AI agents appearing to fall under that classification.
With the founders physically confined, any real integration with Meta’s teams was effectively frozen.
Later in April, Chinese regulators moved from restriction to reversal, issuing a formal order for the deal to be unwound on national security grounds.
Beijing also moved beyond Manus. Top AI firms, including Moonshot AI, StepFun, and ByteDance, were reported to require government approval before accepting US investment as part of a broader effort to tighten control over the sector.
Chinese authorities also expanded travel restrictions to researchers and executives at private firms more broadly, requiring government approval before heading abroad.
As of June, Meta has begun the operational separation, cutting Manus off from its internal systems and halting data sharing between the two companies, with employees barred from using Manus tools for internal projects.
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Meta spent $2 billion and got months of integration friction, geopolitical exposure, and a talent pipeline it never fully activated. The agentic AI capability it was buying has now reverted to a startup that may list in Hong Kong.
On the US side, Senator John Cornyn had questioned whether American capital should flow to a Chinese-linked firm, meaning Meta also absorbed reputational risk at home while losing the asset abroad.
The likely pivot is probably internal, where Meta will have to build or buy its way into agentic AI without crossing the same geopolitical tripwire, which means looking closer to home.
The Manus saga now comes to a close, setting a clear precedent that Beijing‘s regulatory reach does not stop at the company’s borders.
