After spat with Chinese gov't, Meta cuts AI Manus off from its internal systems and is 'sunsetting' platform, report claims — Beijing-ordered breakup of $2 billion AI deal begins

After spat with Chinese gov't, Meta cuts AI Manus off from its internal systems and is 'sunsetting' platform, report claims — Beijing-ordered breakup of $2 billion AI deal begins Manus staff lost access to Meta's data systems earlier this month. Meta has finished separating its operations from Manus, the Chinese-founded agentic AI startup it acquired for roughly $2 billion in December, Bloomberg reported, citing people familiar with the matter. Manus employees have reportedly been locked out of Meta's internal data systems since the start of the month. Meta staff are now barred from using Manus tools for internal work, and an internal memo viewed by Bloomberg says Meta is "sunsetting" the platform, with existing Manus projects to be migrated onto Meta's own systems. The split is the first concrete step in complying with Beijing's April order to reverse the completed acquisition, right as the startup's three founders attempt to raise around $1 billion to buy their company back. China's National Development and Reform Commission (NDRC) ordered the deal undone in April under its foreign investment security review mechanism, the country's rough equivalent of CFIUS in the U.S. It was the first time Beijing has forcibly reversed a completed cross-border AI acquisition, and the commission asserted jurisdiction despite Manus having moved its headquarters and core team from Beijing to Singapore in mid-2025. The review sharpened in March, when authorities barred co-founders Xiao Hong and Ji Yichao from leaving mainland China, with the order reportedly requiring Manus's Chinese assets to be restored to their pre-acquisition state within weeks. The order extends to AI companies and their engineers the same restrictions Beijing has been increasingly applying to silicon all year. Chinese regulators have held up Nvidia's H200 shipments even after Washington approved them, while DeepSeek launched its 1.6 trillion parameter V4 model on Huawei silicon. Manus drew comparisons to DeepSeek in Chinese state media as a symbol of domestic AI capability, which made its sale to a U.S. hyperscaler a test case Beijing evidently decided it couldn’t let stand. A blocked fab or factory sale can simply be reversed by returning equity, equipment, and IP, though: Manu’s value sits in its model weights and engineering know-how, both of which have been freely flowing into Meta for the last six months. No ban or firewall can recall what Meta’s engineers have already learned from that, and Meta hasn’t yet said how it’ll demonstrate to the NDRC that Manus’s tech is out of its stack. Founders Xiao Hong, Ji Yichao, and Zhang Tao have discussed raising about $1 billion from outside investors to fund a buyback at a valuation at least matching the $2 billion Meta paid, though it remains unclear how far those talks have progressed. Early backers, including Tencent, ZhenFund, and HSG, have already received their proceeds from the sale. Follow Tom's Hardware on Google News, or add us as a preferred source, to get our latest news, analysis, & reviews in your feeds. Get Tom's Hardware's best news and in-depth reviews, straight to your inbox. Luke James is a freelance writer and journalist. Although his background is in legal, he has a personal interest in all things tech, especially hardware and microelectronics, and anything regulatory. - Zaranthos Meta lost big on this deal. It goes to show that moving operations out of China doesn't protect companies from Chinese government control. Meta wanted to gobble up more AI talent and ultimately made a bad deal. Meta has plenty of other AI talent and projects but the appetite for more is likely to cloud the vision of many. Lots of money will be lost in this environment for sure. There will be really big winners and really big losers.Reply - Zaranthos Reply Possibly, but when the deal soured Meta heavily restricted access to its systems and tech. But China is well known for stealing tech and circumventing security to do it. It's not likely that either party would admit to it if it happened either.Air2004 said:If info was freely flowing into Meta wouldn't the obverse also be true ?