Meta is preparing to have to undo its Manus acquisition after China ban

Subscribe to enjoy similar stories.Meta Platforms is preparing to have to unwind its acquisition of the artificial-intelligence startup Manus after China banned the transaction on national-security grounds Monday, according to people familiar with the matter.Meta bought Manus, a China-linked, Singapore-based startup that specializes in building AI agents, in December for $2.5 billion, and quickly moved to integrate the new technology into its systems. Any attempt to undo the acquisition would mean disentangling the two.In another complication, Manus’s investors, which include California-based venture-capital firm Benchmark, have already received their returns, people with knowledge of the matter said.Meta garners significant revenues from Chinese advertisers who target consumers outside China, despite Facebook and other Meta apps being blocked in the country.Several former Manus investors in Asia, including Tencent, HSG and ZhenFund, have planned to cooperate if Meta goes ahead to unwind the deal, some of the people said.Beijing has handed the two companies a preliminary deadline of several weeks to unwind the deal and fully restore Manus’s Chinese assets to their original state, some of the people said.

This includes stripping any previously transferred data or technology from Meta. Beijing has also considered imposing penalties on Manus and Meta if the deal couldn’t be fully rescinded, these people said.Benchmark didn’t immediately respond to a request for comment.The deal angered Beijing, which started reviewing the deal shortly after it was announced, and in March called in the two co-founders—Xiao Hong and Ji Yichao—to discuss the acquisition.