China expands its analysis of Meta's historic $2 billion acquisition of Manus
China Expands Probe into Meta’s $2 Billion AI Startup Acquisition
Chinese authorities have widened their investigation into Meta Platforms Inc.’s $2 billion acquisition of Manus, a Chinese-founded artificial intelligence startup, raising the possibility that regulators could seek changes to—or even unwind—the deal if violations are found.
According to people familiar with the matter, Chinese regulators are examining whether the December acquisition breached rules related to technology exports or national security. The main concern is whether sensitive Chinese technology or user data may have been transferred to a US company.
The review has now expanded to include potential violations of regulations governing cross-border currency flows, tax accounting and overseas investments. The investigation highlights the intense scrutiny surrounding Meta’s rare acquisition of an Asian tech company and marks another major AI investment by Meta co-founder Mark Zuckerberg.
Meta has described the deal as a key step in strengthening its AI services, particularly those focused on agentic AI systems that can perform tasks on behalf of users. However, the acquisition has raised concerns in Beijing about an American company gaining control of advanced AI technology developed by a startup of Chinese origin.
Manus was founded by Chinese entrepreneurs under its parent company Butterfly Effect, which initially operated in China before relocating its headquarters and staff to Singapore. The startup attracted prominent US investors, including venture capital firm Benchmark, during its rapid rise.
People familiar with the matter said the investigation remains at an early stage and China may ultimately decide not to take action. Some officials had privately supported Manus following the deal, and the transaction may be difficult to reverse since investors have already received their payouts.
The case has also drawn attention to a practice known in the tech industry as “Singapore-washing,” where Chinese-origin companies move operations to Singapore to expand overseas. Chinese regulators reportedly raised concerns after Manus began relocating staff from Beijing and Wuhan to Singapore last year, citing potential issues related to data transfers and taxation.
While Manus’s main AI agent product was never launched in China, one of Butterfly Effect’s earlier products—a Chrome browser extension—remains available domestically. Regulators initially did not intervene, believing the company would maintain close ties with China.
Manus gained global attention in March after launching AI agents capable of tasks such as resume screening, trip planning and stock analysis. The company claimed its product outperformed some offerings from OpenAI. Since then, several Chinese tech firms, including ByteDance and Baidu, have launched rival agentic AI platforms.
Under the deal, Meta plans to fully take over Manus’s operations, severing its remaining ties with China, while continuing to sell the service and integrate its technology into Meta’s products. Meta’s Chief AI Officer Alexandr Wang welcomed the Manus team on social media, while Manus co-founder Red Xiao said the acquisition would help expand the company’s global reach.
Neither Meta nor Manus commented on the investigation, and China’s Commerce Ministry did not respond to a request for comment.
