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Butterfly Effect, the startup behind AI agent Manus, has shut down its entire China team to reduce geopolitical risks, reports The Information. In May, the founders Red Xiao, Peak Ji, and Tao Zhang reportedly moved to Singapore, where the company is now building its new headquarters. It is also hiring in Singapore, the U.S., and Japan, and has opened offices in San Mateo and Tokyo. Until last week, several dozen employees were still based in China, but many have since left. Manus targets the U.S. market, where Chinese connections are increasingly seen as a risk.

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Mistral AI and All Hands AI have introduced two new models designed for AI-powered programming agents: Devstral Small 1.1 and Devstral Medium. Devstral Small 1.1 2507 is open source and can run locally on an RTX 4090 or a Mac with 32 GB of RAM. It achieved a 53.6% score on the SWE-Bench Verified benchmark and supports XML along with other formats.

Image: Mistral

Devstral Medium scored 61.6% on the same benchmark. According to Mistral, it offers more power and a lower price than Gemini 2.5 Pro and GPT-4.1. The model is available via API, supports fine-tuning, and will soon be integrated into Mistral Code.

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Google is adding three new AI modes to Firebase Studio. The update introduces "Agent" modes powered by Gemini 2.5: a conversational "Ask" mode, a guided "Agent" mode that acts with user approval, and a fully autonomous "Agent Auto-run" mode that can write and update code on its own. Google says all three modes respect project-specific rules and require user approval for any security-sensitive actions.

Google says that in Agent Auto-run mode, Firebase Studio can generate entire apps or add new features to existing projects with minimal user input. | Video: Google

Firebase Studio now also supports the Model Context Protocol (MCP), making it easier to connect external data sources. Developers can access the Gemini command line (CLI) directly in the terminal for tasks like debugging and code management.

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