US tech giant Meta has reportedly commenced the process of dismantling its $2 billion acquisition of Chinese-founded AI startup, Manus. This significant move comes in response to a divestiture order issued by Beijing approximately two months ago, citing national security grounds. The development marks a pivotal moment in China's assertive strategy to maintain stringent control over its burgeoning artificial intelligence sector.
According to reports, Meta has taken concrete steps to separate from Manus, including cutting off the AI startup from its internal systems and halting all data sharing between the two entities. This operational separation prevents Meta employees from utilising Manus tools for internal projects as both companies navigate towards a full unwind of the original December acquisition. The transaction, which was initially envisioned as a landmark exit for Chinese AI, is now rapidly unravelling.
Amidst these developments, the co-founders of Manus are reportedly in preliminary discussions to raise approximately $1 billion from outside investors. The aim is to reclaim the startup from Meta, a move that could potentially pave the way for a Chinese joint venture structure and an eventual listing on the Hong Kong stock exchange. Hong Kong has seen a notable increase in AI listings this year from Chinese startups such as MiniMax and Zhipu, indicating a growing domestic market for such ventures.
This forced divestiture underscores Beijing's unwavering determination to retain sovereignty over strategically sensitive technology, irrespective of a company's offshore incorporation. Furthermore, Chinese authorities have broadened travel restrictions for researchers and executives at private firms, now requiring government approval for overseas travel. Reports also suggest a tightening grip on foreign capital, with leading AI firms, including Moonshot AI, StepFun, and ByteDance, potentially needing government sign-off before accepting US investment. This adds another layer to Beijing's extensive efforts to control its AI sector.
The scrutiny surrounding Manus stemmed from its Chinese origins, particularly its parent company Butterfly Effect, which drew attention from both sides of the Pacific. Notably, US Senator John Cornyn had questioned the appropriateness of American capital flowing into a Chinese-linked firm. Despite the ongoing unwinding, Manus has continued to develop and release new features, including integrations with platforms like Similarweb and Shopify.