Key takeaways China’s Ministry of Commerce has initiated a formal investigation into Meta’s $2 billion acquisition of AI startup Manus for potential export control violations. The probe focuses on whe...
China has launched a formal investigation into Meta Platforms' $2 billion acquisition of artificial intelligence startup Manus, raising concerns about potential technology export control violations and the outflow of Chinese AI capabilities to American companies.
The country's Ministry of Commerce announced Thursday it will conduct an assessment to determine whether the deal complies with regulations concerning export controls, technology imports and exports, and overseas investment.
The review marks a significant regulatory challenge for Meta's acquisition, which was announced in December and valued at more than $2 billion according to sources familiar with the transaction.
At the center of Beijing's concerns is whether Manus needed an export license when it relocated its core team and AI technology from China to Singapore in the summer of 2025.
Although Manus is officially registered in Singapore, Chinese authorities maintain jurisdiction over the review because the company's AI products were developed while it was based in China.
The relocation came after a U.S. venture capital firm, Benchmark, led a $75 million funding round in Manus, which prompted scrutiny from American regulators worried about U.S. capital flowing into Chinese AI companies.
U.S. Senator John Cornyn publicly criticized the investment, leading to inquiries from the Treasury Department about compliance with new rules restricting American investment in Chinese artificial intelligence firms.
Ministry of Commerce spokesperson He Yadong emphasized China's support for international technology cooperation while underscoring regulatory requirements.
"The Chinese government consistently supports enterprises in conducting mutually beneficial transnational operations and international technological cooperation in accordance with laws and regulations," He said at a press briefing on Thursday.
"But it should be noted that the external investment, technology exports, data exports, and cross-border acquisitions by companies must comply with Chinese laws and regulations and go through due process."
Chinese officials worry that approving the Meta-Manus transaction could encourage a wave of domestic AI startups to physically relocate overseas to circumvent regulatory oversight—a practice some analysts have dubbed "Singapore washing."
Winston Ma, a professor at New York University School of Law and partner at Dragon Capital, told the Wall Street Journal that if the deal closes smoothly, "It creates a new path for the young AI startups in China."
The stakes extend beyond this single transaction. Manus was hailed as one of China's most promising AI startups after launching its first AI agent in March 2025, which can perform complex tasks, including market research, coding, and data analysis.
The company's three founders—Red Xiao, Peak Ji, and Tao Zhang—all relocated from China to Singapore along with the core team.
Meta announced plans to integrate Manus's technology into its consumer and business products.
"Manus's exceptional talent will join Meta's team to deliver general-purpose agents across our consumer and business products, including in Meta AI," the company said in a December statement.
Industry analysts suggest the investigation is unlikely to result in an outright block but will probably extend the approval timeline and potentially impose conditions on how the acquired technology can be used.
Nick Patience, AI lead at The Futurum Group, told CNBC that China's probe "underlines that [the country] considers advanced AI agents, models and related IP to be strategic assets."
He added, "The most likely outcome I see is a lengthier approval process and potential conditions around how Manus technology developed in China can be used, rather than an outright block, but the threat of stricter action gives Beijing bargaining power in a high-profile, US-led acquisition."
The review comes as Beijing continues to scrutinize high-profile technology transactions involving Chinese-developed assets.
Authorities have taken particular interest in deals involving the movement of data, algorithms, or advanced AI systems outside the country.
A similar pattern is visible in Beijing's ongoing examination of ByteDance's proposed sale of TikTok US to American investors, which has yet to receive formal approval from Chinese officials.
The outcome of the Meta-Manus investigation could have significant implications for future cross-border AI deals and the broader technology competition between the United States and China.
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