Why Meta Is Facing China Probe Over Acquisition of AI Startup Manus

Mumbai, January 8: China’s Ministry of Commerce announced on Thursday, January 8, that it is launching an investigation into Meta Platforms’ recent acquisition of artificial intelligence startup Manus, citing potential violations of national export control and technology transfer laws. The probe, confirmed by ministry spokesperson He Yadong on Thursday, focuses on whether the startup required an official license from Beijing before moving its staff and proprietary technology to Singapore and subsequently selling to the US tech giant.

The deal, valued at approximately USD 2 billion, represents a rare instance of a major American technology firm acquiring a high-profile AI company with deep Chinese roots during a period of intense technological rivalry between Washington and Beijing. Meta Faces Lawsuit by Former Security Head Over Alleged Cybersecurity Flaws in WhatsApp.

Why China Probing Meta's Acquisition of AI Startup Manus

The investigation marks a significant escalation in Beijing's efforts to regulate the flow of advanced technology out of the country, particularly in the rapidly evolving field of generative AI. Manus, originally founded in China as Butterfly Effect before relocating to Singapore last summer, gained international attention early last year for its "general-purpose" AI agent. The platform is capable of performing complex, multi-step tasks such as data analysis, software coding, and financial research with minimal human prompting.

The core of the investigation lies in whether the relocation of Manus' core assets, specifically its algorithms and technical talent, violated Chinese laws updated as recently as July 2025. These regulations require government approval for the export of sensitive technologies, including data-driven personalised services and AI user interfaces. AI in Propaganda: China’s Expanding Use of Generative Tools To Spread State Smear Campaigns, Build Social Media Persona To Influence Global Audience Raises Serious Concerns.

Regulators are scrutinizing a trend often referred to as “Singapore washing,” where Chinese-founded firms move their headquarters to the city-state to avoid geopolitical friction and US investment restrictions. Beijing is reportedly concerned that allowing such deals to proceed without oversight could encourage a talent drain and the unauthorized transfer of strategically vital intellectual property to Western competitors.

The probe highlights the deepening "tech cold war" between the world's two largest economies. While Meta stated that the acquisition would result in "no continuing Chinese ownership interests" and that Manus would discontinue its operations within mainland China, Beijing remains wary. Analysts suggest that any technology transfer that could provide the US with a competitive edge is now viewed as a national security risk by Chinese policymakers.

If the Ministry of Commerce determines that an export license is mandatory, it could gain the legal leverage to impose significant fines, demand modifications to the deal, or, in an extreme scenario, attempt to block the transaction entirely. Such a move would complicate Meta’s plans to integrate Manus’ advanced "AI agents" into its core platforms, including Facebook, Instagram, and WhatsApp.

Founded in 2022, Manus achieved remarkable growth, reportedly reaching over USD 100 million in annual recurring revenue within just eight months of operation. The startup’s co-founder, Ji Yichao, a high-profile entrepreneur in the Chinese tech scene, has previously drawn parallels between his own journey as a college dropout and that of Meta CEO Mark Zuckerberg.

(The above story first appeared on LatestLY on Jan 08, 2026 06:43 PM IST. For more news and updates on politics, world, sports, entertainment and lifestyle, log on to our website latestly.com).