Meta’s two-billion-dollar acquisition of the AI assistant platform Manus is caught in a regulatory tug-of-war, but surprisingly not by U.S. regulators. American authorities appear assured the deal is legitimate despite earlier concerns about Benchmark’s investment in Manus. According to the Financial Times, China’s regulators are the ones with significant reservations.
The controversy began earlier this year when Benchmark led a financing round for Manus. That investment sparked immediate criticism from U.S. Senator John Cornyn and prompted inquiries from the U.S. Treasury Department regarding rules that restrict American investment in Chinese AI companies. These concerns were substantial enough to drive Manus to relocate its headquarters from Beijing to Singapore, a move described by one Chinese professor as part of the company’s “step-by-step disentanglement from China.”
Now the situation has reversed. Chinese officials are reportedly reviewing whether the Meta deal violates technology export controls. This scrutiny gives Beijing potential leverage it was not initially thought to have. Specifically, regulators are examining if Manus needed an export license when it moved its core team from China to Singapore, a relocation tactic now so common it has earned the nickname “Singapore washing.” While a recent Wall Street Journal article speculated China had few tools to influence the deal due to Manus’s foothold in Singapore, that assessment may have been premature.
Beijing’s concern is that a smooth acquisition could encourage more Chinese startups to physically relocate to avoid domestic oversight. Winston Ma, a professor at New York University School of Law and partner at Dragon Capital, noted that if the deal closes, it creates a new path for young AI startups in China. History suggests Beijing could act, as it previously used similar export control mechanisms to intervene during the attempted TikTok ban under the Trump administration. The Chinese professor even warned that Manus’s founders could face criminal liability if they exported restricted technology without authorization.
Meanwhile, some U.S. analysts view the acquisition as a win for Washington’s investment restrictions, arguing it shows Chinese AI talent is defecting to the American ecosystem. One expert told the Financial Times that the deal demonstrates the U.S. AI ecosystem is currently more attractive.
It is too early to know if this will impact Meta’s plans to integrate Manus’s AI agent software into its products, but this two-billion-dollar deal has become more complicated than anyone anticipated.