Meta preparing to unwind $2.5 billion Manus acquisition, let co-founders go after China ban: Report
Meta plans to roll back its acquisition of artificial intelligence startup Manus after the Chinese government banned the transaction on national security grounds on Monday, according to a new report from The Wall Street Journal, citing sources familiar with the matter.
The company, led by Mark Zuckerberg, acquired Manus AI for $2.5 billion last year and then worked to integrate the company’s technology into its own systems. Any attempt to reverse the deal is expected to be complex and require the company to separate operations, data and technology that have already been combined.
Meanwhile, a Bloomberg report had stated that Manus staff had been integrated into Meta, funds had been deployed, and the startup’s leadership had joined the company’s artificial intelligence division. Manus employees have also already moved to Meta’s Singapore offices, while former stakeholders such as Tencent, ZhenFund and HongShan have also collected their payments.
Meta’s plan to undo the Manus acquisition:
The WSJ report notes that several former Manus investors in Asia, including Tencent, HSG and ZhenFund, plan to cooperate if Meta goes ahead with its plan to undo the deal.
One of the biggest challenges is that Manus’ investors, including US-based venture capital firm Benchmark, have already received returns from the deal.
China’s deadline for Meta:
Reportedly, Chinese authorities gave Meta and Manus a several-week grace period to fully reverse the acquisition and return the startup’s Chinese assets to their original state; This requires that any previously transferred data or technologies be removed from the Meta ecosystem.
Beijing is reportedly considering imposing further penalties on both Meta and Manus if the two companies do not cancel the deal entirely.
Founders of Manus in plus signs:
Meta’s acquisition of Manus reportedly angered Beijing, which began investigating it soon after. In March, Manus AI co-founders Xiao Hong and Ji Yichao were summoned by Chinese authorities to discuss the acquisition. They were then banned from leaving the country until the investigation was completed.
Ahead of Monday’s official ban, Meta had reportedly discussed allowing founders to leave the company as a potential concession to appease Beijing. Meta has now accepted that he will have to let Xiao and Ji go as part of the official relaxation process.
Why does China believe it can ban unification?
Engineers at Beijing Butterfly Effect Technology, which Xiao founded in 2022, created the first versions of Manus. Later, a Singapore-based startup also called Butterfly Effect took over the AI broker’s business in markets outside China.
Manus moved most of its China-based employees to Singapore last year after receiving investment from Benchmark.
Chinese officials believe they have the authority to demand termination of the agreement because Beijing Butterfly Effect Technology remains a Chinese company. Chinese law states that any foreign investment that may pose a national security risk may be subject to review by authorities.
