Beijing Scrutinizes Meta’s $2B Manus Grab as AI Startup Flees Chinese Roots

Several Chinese authorities are investigating Meta’s $2-2.5 billion acquisition of AI startup Manus, questioning whether the deal violated technology export control laws. The review is currently in early stages but could escalate into a formal investigation by the Chinese Ministry of Commerce (MOFCOM) and other regulatory bodies.

The transaction, widely described as an “acquihire,” includes about $500 million in retention incentives for Manus employees. Meta primarily sought to acquire the company’s team and AI agent technology. The deal came shortly after Manus raised $75 million in funding that valued the startup at $500 million.

At the center of Beijing’s concerns is Manus’ relocation from China to Singapore before the acquisition. Founded in Beijing and Wuhan, Manus moved its core team and intellectual property to Singapore by mid-2025, effectively emptying its Beijing offices. Critics call this strategy “Singapore washing” – relocating to manage geopolitical and regulatory risks.

Companies fleeing Chinese oversight via Singapore relocation face new scrutiny as regulators clamp down on regulatory arbitrage

Chinese officials are examining whether this corporate shift still counts as an export requiring government approval. They’re specifically investigating if Manus’ AI agent algorithms fall under China’s restricted export categories, which would have required a license.

Experts close to MOFCOM argue the deal likely breaches China’s technology export controls. Some legal scholars warn Manus founders could face criminal liability if they exported restricted technologies without proper authorization.

For Beijing, the case raises strategic concerns about elite AI talent leaving the country. Officials worry that a successful high-profile exit could create a template for other Chinese AI startups to bypass domestic oversight. Manus has attempted to distance itself from its origins by emphasizing its non-Chinese status despite being founded in China.

Under the deal terms, Manus CEO Xiao Hong will stay on, reporting to Meta COO Javier Olivan in what appears to be a VP-level role. Meta has stated that no Chinese ownership interests remain in Manus, and that the company would end all services and operations in mainland China.

The company gained substantial recognition in March 2025 when it launched what was considered the world’s first general AI agent capable of completing various tasks for users.