Meta has locked Manus behind a firewall: banning two-way access to internal systems, and the $2 billion acquisition has been forcibly dismantled.

According to reports, Meta has built a data firewall between itself and Manus, prohibiting two-way access to internal systems. Internal memos indicate the company is “gradually shutting down” this service.
(Background: The technology is ready, and employees have already left—why does Manus want to buy the company back from Meta?)
(Additional context: Manus’ founder raised $1 billion to “buy back the company” from Meta and plans to list in Hong Kong.)

Table of Contents

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• From a Template to a Warning: Four Months for a Deal
• Firewalls, Memos, and a $1 Billion Buyback
• Beijing Rewrites the Rules for Cross-Border AI Acquisitions

Beijing is trying to take apart the symbolically significant AI acquisition case in Silicon Valley and trace it back to its origins. According to Bloomberg’s latest report, Meta has this month fully banned Manus and its employees from accessing the U.S. company’s internal data systems. At the same time, it has also blocked Meta employees from using Manus tools in internal projects.

According to an internal memo, employees were told to migrate existing Manus projects to Meta systems and stop doing new work on that platform.

From a Template to a Warning: Four Months for a Deal

In December 2025, when Meta announced the acquisition of Manus’ parent company, Butterfly Effect, the deal was viewed as a milestone for Chinese AI startups stepping onto the global stage. Manus is known for a general AI agent; less than eight months after its launch, its annualized revenue had already exceeded $100 million. This year in April, it completed a $75 million Series B led by the U.S. venture firm Benchmark, with investors also including Tencent and Sequoia China.

Manus’ three founders—Xiao Hong, Ji Yichao, and Zhang Tao—started out in China, but before the acquisition was announced, they had already relocated their headquarters and core employees to Singapore. A Meta spokesperson at the time said that Manus “no longer has ongoing Chinese equity interests,” and promised to end its services in China. This explanation provided geopolitical cover for the deal, but Beijing clearly does not accept the logic.

At the end of April this year, China’s National Development and Reform Commission (NDRC), citing national security, ordered the deal to be terminated under the “Foreign Investment Security Review” mechanism. This is the first time since the mechanism began operating that it has ordered the dismantling of a completed cross-border transaction. After about four months of review, Beijing concluded that even if Manus had been legally relocated outside China, the transaction still violated foreign investment and technology export regulations.

Firewalls, Memos, and a $1 Billion Buyback

According to Bloomberg, the “fencing” described by insiders is a substantive data isolation wall: a complete two-way cut-off between Meta and Manus, with no exceptions. Manus employees have already moved into Meta’s Singapore office. People from both sides work under the same roof, yet they cannot share any systems.

Meanwhile, Manus’ founders are discussing a plan to raise funds for a buyback. The target valuation is no less than the $2 billion Meta originally paid, requiring roughly $1 billion in cash to complete the buyback. It remains unclear whether investors who already received payouts from the Meta acquisition—including Tencent, ZhenFund, and Sequoia China—will participate in the buyback discussions.

Notably, despite the regulatory storm, Manus has not stopped product development. According to an announcement on its official website, after the Beijing order, it continued integrating Similarweb data analytics services and added Shopify e-commerce functionality. As of this week, users can still connect with Meta’s Ads Manager, Instagram, Gmail, and GitHub.

Beijing Rewrites the Rules for Cross-Border AI Acquisitions

The unraveling of this acquisition affects not only Meta and Manus.

This order from China’s NDRC sets a new precedent: Beijing has the capability—and the willingness—to step in and dismantle technology deals acquired abroad after they have been completed. For any AI startup planning to evade China’s regulation through moving registration or offshore structures, and to then go on to global capital markets, this is a direct warning.

Meta’s logic for this move is clear: acquire specialized AI startups to attract talent and accelerate its AI business, aligning with its broader strategy of promoting open-source Llama language models (Llama). Manus’ agent-based AI capabilities are precisely the piece Meta needs to strengthen in this space. However, once Beijing’s regulatory reach extends to Singapore, the geopolitical risks of this talent acquisition strategy are being reassessed entirely.

For Silicon Valley, the appeal of China’s AI talent will not disappear, but the legal complexity of bringing talent in has multiplied. For Chinese entrepreneurs, this also means that leaving China no longer automatically equals escaping Beijing’s jurisdiction.