Mark Zuckerberg-owned Meta has started dismantling its $2 billion acquisition of AI startup Manus after Chinese regulators ordered the deal to be reversed, according to a Bloomberg report. Meta “has completed an operational split from Manus and halted data sharing between the two companies, taking a pivotal step toward unwinding a $2 billion acquisition opposed by Beijing,” the Bloomberg report stated. The development comes after China gave a two-week deadline to Meta as the country tightens its control over technology, data, talent and overseas investments amid growing competition with the United States in AI.
Meta asks employees to stop using Manus tools
According to Bloomberg, Meta has ordered employees to stop using Manus tools for internal projects. The report also said that Manus staff have been blocked from accessing Meta’s internal data systems beginning this month.The operational split is part of a broader effort to reverse the acquisition that Meta announced in December last year. To recall, Chinese regulators directed the deal to be unwound in April under the country’s foreign investment security review process.Legal experts told Bloomberg that the decision was unprecedented and has turned the Meta-Manus transaction into a major test case for China’s technology controls.
Why China ordered Meta to unwind Manus deal
Manus moved its headquarters and core teams to Singapore last year before agreeing to be acquired by Meta. However, Chinese authorities reportedly viewed the transaction as involving sensitive technology and talent.“Chinese-origin AI now carries a kind of reversibility risk that no clever deal structure can price out,” Matthias Hendrichs, a Singapore-based adviser to global AI companies, told Bloomberg.“Once another company’s engineers have been inside your stack, you can delete the repository, but you can’t make them unsee what they’ve seen,” he added.
China tightens controls on AI
As per the Bloomberg report, Beijing has recently introduced new rules that give authorities greater power over overseas transactions involving Chinese investors, technology, data and national security concerns. The rules are scheduled to take effect on July 1.The framework will reportedly allow China to intervene not only in future transactions but also in completed deals.
