Meta cuts Manus off from data systems, begins unwinding deal

Meta has erected a data firewall between itself and Manus, the Chinese-founded agentic AI service it acquired for $2 billion in December 2025. Since the start of June, Manus and its staff have been barred from accessing Meta’s internal data systems, and Meta employees can no longer use Manus tools for internal projects, according to Bloomberg.

An internal memo viewed by Bloomberg instructed staff to migrate existing Manus projects onto Meta’s own systems and not to start new work on the platform. Meta is “sunsetting” Manus, the memo said.

Why the deal is being unwound

China’s National Development and Reform Commission ordered the deal unwound in April 2026, after a four-month regulatory probe that began almost immediately after the acquisition was announced. The NDRC concluded that the transaction violated foreign investment and technology export rules, even though Manus had relocated its headquarters and key staff from China to Singapore in 2025.

The probe escalated in March when Chinese authorities restricted co-founders Xiao Hong and Ji Yichao from leaving the country and summoned them to Beijing for questioning. The intervention sent a clear message to Chinese AI founders: incorporating in Singapore does not put you beyond Beijing’s reach.

The buyback plan

Manus’s three founders, Xiao Hong, Ji Yichao, and Zhang Tao, are exploring options to raise approximately $1 billion from external investors to fund a buyback at a valuation matching the $2 billion Meta paid. The founders may contribute their own money to cover the rest, Bloomberg reported last month.

If the buyback proceeds, the next step would involve setting Manus up as a Chinese joint venture with those backers, ahead of a potential Hong Kong IPO. It remains unclear whether the fundraising discussions have advanced significantly.

What is still connected

Despite the operational split, Manus has continued adding features. It has integrated data from Similarweb, added e-commerce functionality from Shopify, and as of this week still gives users the option to connect with Meta’s Ads Manager, Instagram, Gmail, and GitHub.

Manus staff have moved into Meta’s Singapore offices. Investors including Tencent, ZhenFund, and HSG have already received their proceeds from the acquisition, complicating any attempt to fully reverse the transaction.

From viral demo to cautionary tale

Manus launched in invitation-only beta in March 2025 with a demo video that drew more than one million views in 20 hours, showcasing an autonomous AI agent that could browse the web, write code, manage files, and complete multi-step tasks without human supervision. It was hailed as China’s second “DeepSeek moment,” a breakthrough that could challenge Silicon Valley’s dominance in agentic AI.

The entire arc, from viral demo to $2 billion exit to regulatory demolition, took less than a year. China has since formalised tougher outbound-investment rules that give regulators an expanded toolkit for blocking cross-border AI transactions involving technology, talent, or intellectual property with Chinese origin, regardless of where the company is incorporated.

The flags

The operational split is a step toward unwinding the acquisition, not the unwind itself. The financial mechanics of reversing a completed deal where investors have already been paid out remain unresolved, and the $1 billion fundraise is not yet confirmed.

Some Manus features, including connections to Meta’s Ads Manager and Instagram, remain active despite the data firewall, raising questions about how complete the separation currently is. Whether Manus can sustain itself as an independent company after losing access to Meta’s infrastructure and resources is an open question, particularly if it must restructure as a Chinese joint venture under tighter regulatory oversight.