Hajra Naz
Meta’s proposed $2 billion acquisition of AI assistant startup Manus has become entangled in a geopolitical regulatory battle—but not in the way many expected.
In the United States, regulators appear largely comfortable with the deal, despite earlier unease surrounding Benchmark’s investment in Manus. In China, however, authorities are now taking a much closer look. According to the Financial Times, Beijing is examining whether the transaction violates China’s technology export control laws, potentially giving Chinese regulators unexpected leverage over a deal that once seemed firmly outside their reach.
Scrutiny around Manus began earlier this year when Benchmark led a funding round in the company. The investment quickly drew political attention in Washington. U.S. Senator John Cornyn publicly criticized the deal on X, while the U.S. Treasury Department reportedly initiated inquiries under new rules aimed at limiting American investment in Chinese AI firms.
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Those concerns were serious enough to influence Manus’s strategic direction. The company ultimately relocated its headquarters and core operations from Beijing to Singapore, a move that one Chinese academic described on WeChat as a “step-by-step disentanglement from China.” The relocation also placed Manus outside the immediate scope of China’s domestic regulatory framework.
Now, that same move may be coming back into question.
Chinese regulators are reportedly investigating whether Manus required an export license when it transferred key personnel and technology to Singapore—a practice that has become so common it’s informally known as “Singapore washing.” While a recent Wall Street Journal report suggested China had limited ability to interfere due to Manus’s Singapore presence, current reviews indicate that assumption may have been overly optimistic.
Beijing’s broader concern appears to be precedent. Officials worry that allowing the Meta acquisition to proceed without resistance could encourage other Chinese AI startups to relocate overseas to avoid domestic oversight. Winston Ma, a professor at NYU School of Law and a partner at Dragon Capital, told the Journal that a smooth deal would effectively “create a new path for young AI startups in China.”
China has shown before that it is willing to act in similar situations. During the Trump administration’s attempted TikTok ban, Beijing used export control rules to assert influence over ByteDance’s algorithms. In the current case, a Chinese professor warned on WeChat that Manus’s founders could face criminal liability if restricted technologies were transferred abroad without proper authorization.
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Meanwhile, some U.S. analysts are framing the acquisition as a strategic win for Washington. They argue the deal highlights the growing pull of the U.S. AI ecosystem, suggesting that top Chinese AI talent increasingly sees greater opportunity under American ownership. One expert told the Financial Times that the transaction shows “the U.S. AI ecosystem is currently more attractive.”
Whether these regulatory tensions ultimately affect Meta’s plans to integrate Manus’s AI agent software remains unclear. But what began as a straightforward acquisition now sits at the intersection of global AI competition, capital controls, and national security—making the $2 billion deal far more complicated than initially anticipated.
