Meta's $2 billion acquisition of AI assistant platform Manus has unexpectedly landed in a regulatory tug-of-war, not primarily due to U.S. concerns, but rather from Beijing. While U.S. regulators appear satisfied with the deal despite earlier misgivings about Benchmark's investment in Manus, Chinese authorities are reportedly less optimistic, according to the Financial Times.
Earlier this year, Benchmark's lead in a financing round for Manus drew immediate scrutiny in the U.S. Senator John Cornyn voiced complaints on X, and the investment prompted inquiries from the U.S. Treasury Department regarding new rules restricting American investment in Chinese AI companies. These concerns were significant enough to prompt Manus's eventual relocation from Beijing to Singapore, a move described by one Chinese professor on WeChat as part of the company's "step-by-step disentanglement from China."
However, the regulatory focus has now shifted. Chinese officials are reportedly reviewing whether the Meta deal violates technology export controls, potentially granting Beijing unexpected leverage. Specifically, they are examining whether Manus required an export license when it moved its core team from China to Singapore—a practice now so common it has been dubbed "Singapore washing." A recent Wall Street Journal article had speculated that China possessed "few tools to influence the deal given Manus's foothold in Singapore," but this assessment now appears premature.
Beijing's primary concern is that this deal could incentivize more Chinese startups to relocate physically to circumvent domestic oversight. Winston Ma, a professor at New York University School of Law and partner at Dragon Capital, told the Journal that a smooth closing of the deal "creates a new path for the young AI startups in China." Beijing has a precedent for such actions, having previously used similar export control mechanisms to intervene in the Trump administration's attempted TikTok ban. The Chinese professor even warned on WeChat that Manus's founders could face criminal liability if they exported restricted technology without authorization.
Meanwhile, some U.S. analysts are hailing the acquisition as a victory for Washington's investment restrictions, arguing it demonstrates that Chinese AI talent is migrating to the American ecosystem. One expert informed the FT that the deal suggests "the US AI ecosystem is currently more attractive."
It remains uncertain how this development will impact Meta's plans to integrate Manus's AI agent software into its products, but this $2 billion deal appears to have become significantly more complicated than initially anticipated.
