China Probes Meta's Manus Acquisition to Block AI Talent Drain

China's Ministry of Commerce has launched a formal investigation into Meta's acquisition of Manus, a Singapore-based AI startup originally founded in China. The probe, confirmed during a Thursday press conference, will examine whether the $2 billion transaction complies with Chinese export control laws and regulations.

The investigation signals Beijing's determination to prevent foreign technology companies from acquiring domestic AI talent and proprietary technology. Manus gained international attention after its March 2024 launch by Butterfly Effect, which claimed to have developed a 'general-purpose' AI agent capable of performing tasks with minimal human supervision. The startup relocated to Singapore in mid-2025 before Meta announced its acquisition in December.

Analysts describe this probe as a strategic move to discourage 'Singapore washing'—the practice of transferring corporate headquarters to Singapore to avoid regulatory oversight. The investigation also represents a broader effort to retain Chinese AI talent and prevent technology transfer to US companies.

China's Ministry of Commerce confirmed the investigation during a Thursday press conference. The probe will specifically evaluate whether Meta's acquisition of Manus violates the country's export control regulations. According to a translated statement, regulators are scrutinizing the transaction's compliance with Chinese law.

Manus was launched in China in March 2024 by the AI product studio Butterfly Effect. The startup quickly drew global attention by announcing it had designed a 'general-purpose' AI agent capable of conducting tasks with limited human supervision. In mid-2025, the company relocated its operations to Singapore. By December, Meta announced plans to acquire the startup and completely sever its ties with China. The deal reportedly exceeds $2 billion.

The investigation's scope includes examining the movement of talent and intellectual property. Meta has stated it plans to bring over Manus' top leadership and continue operating its AI agent platform separately, while integrating the technology into Meta's existing products.

The probe represents a significant escalation in the ongoing technology competition between the United States and China. While both nations have engaged in regulatory exchanges involving tech companies, this investigation is notable for its focus on preventing what analysts call 'Singapore washing'.

This practice involves moving companies from China to Singapore to reduce regulatory scrutiny. Other major companies that have shifted headquarters from China to Singapore include:

• ByteDance, parent company of TikTok
• Shein, the fast-fashion giant

According to analysts, the investigation serves two primary purposes: preventing the loss of AI technology and talent to foreign acquisition, and discouraging Chinese AI startups from choosing the United States as their destination. The probe signals that China intends to police 'outbound AI technology transfer with greater rigor.'

Industry experts view this investigation as marking a new phase in US-China tech competition. The battleground has shifted beyond semiconductor chips to encompass models, agents, talent, and enterprise deployment.

Wendy Chang, a senior analyst at the Mercator Institute for China Studies, stated: "I see Beijing's probe as an effort to prevent the loss of AI technology and talent to foreign acquisition, especially to the US."

Hanna Dohmen, senior research analyst at Georgetown's Center for Security and Emerging Technology, noted that while the probe "isn't entirely surprising," the regulatory approach is "more novel" because it "appears to focus on the movement of talent and IP."

Murthy Grandhi, a company profiles analyst at research firm GlobalData, added that the investigation could accelerate the "bifurcation of AI ecosystems." He believes the most likely outcome is that the deal will be approved "with constraints, rather than an outright block."

The investigation highlights how talent has become a focal point of the AI race, with companies like OpenAI, Meta, and Google offering substantial compensation packages to attract top talent. Last year, Meta invested $14 billion in AI training startup Scale AI and brought its CEO, Alexandr Wang, to lead Meta's AI initiatives.

The duration of China's investigation remains uncertain. Previous investigations by China's Ministry of Commerce have sometimes extended beyond a year. However, analysts suggest several potential outcomes.

Murthy Grandhi predicts the acquisition will likely receive approval with specific constraints rather than facing an outright block. This approach would allow the deal to proceed while ensuring compliance with Chinese regulations and protecting national interests.

Regardless of the final decision, the investigation sends a clear message to other US and foreign companies considering similar acquisitions of Chinese AI startups. Hanna Dohmen emphasized that "whatever the outcome may be, this certainly sends a signal to other US or foreign companies that are considering similar acquisitions."

The probe reflects diverging approaches to AI development between the United States and China. Chinese companies have tended to favor more open AI models, such as DeepSeek, while US companies have pursued different strategies. This investigation may accelerate the development of separate AI ecosystems, with each nation establishing distinct regulatory frameworks and technological standards.