China Draws New Lines Around AI as Meta’s Manus Deal Comes Under Review

Beijing’s review of Meta’s $2bn AI acquisition reflects shifting export-control norms and rising regulatory hurdles for cross-border AI exits.

Chinese authorities have opened a review of Meta Platforms Inc.’s planned acquisition of artificial intelligence startup Manus, drawing attention to how cross-border deals are increasingly subject to geopolitical and regulatory scrutiny. The Meta-Manus deal, announced in December 2025 and valued at more than $2 billion, is now being examined by China’s Ministry of Commerce for compliance with technology export controls and outbound investment laws.

At a press briefing, Ministry of Commerce spokesman He Yadong said authorities “will work with relevant departments to assess and investigate whether Meta’s acquisition of Manus is consistent with Chinese laws and regulations” and stressed that “enterprises engaging in outward investment, technology export, data transfer and cross-border mergers and acquisitions must comply with Chinese laws.”

Why Meta’s Deal Raised Beijing’s Concerns

The scrutiny centres on Manus’s organisational and technical links to China. The startup’s parent company, Butterfly Effect, was founded by Chinese entrepreneurs and conducted much of its early artificial intelligence research and product development in Beijing. Although Manus relocated its headquarters to Singapore in 2025 as part of its global expansion plans, regulators are examining whether core technologies and know-how developed in China were transferred overseas during that transition.

Chinese authorities are particularly focused on whether the relocation — followed by a proposed acquisition by a U.S. technology company — complied with the country’s technology export control framework. In recent years, China has expanded its export regulations to cover sensitive technologies, including certain algorithms and AI systems. As a result, the question regulators are asking is not limited to where a company is legally headquartered, but where its critical research was conducted and how that technology moved across borders.

From Beijing’s perspective, such transactions are not viewed solely as commercial exits. Officials increasingly treat them as potential transfers of strategic assets, including intellectual property, trained models, and technical expertise. The review is assessing whether Manus’s shift to Singapore and subsequent sale to Meta could be classified as an unauthorised export of controlled technology, placing the deal within a broader regulatory effort to tighten oversight of outbound AI technology and talent flows.

Manus in Context: A Rising AI Player

Manus shot to prominence in 2025 with the launch of its autonomous AI agent, a system capable of performing complex, multi-step tasks such as research, coding, and data analysis with minimal human input — a step beyond typical chatbot models. Within eight months of its product launch, Manus claimed to have surpassed $100 million in annual recurring revenue, an exceptionally fast pace for an AI startup.

It also became a key reason why Meta moved to acquire it late last year. Manus had earlier secured a $75 million funding round led by U.S. venture capital firm Benchmark at around a $500 million valuation, drawing on backing from notable investors including Tencent and ZhenFund, and expanded its footprint with teams in Singapore, Tokyo, and San Francisco. 

Its rapid commercial traction and growing user base made it one of the most talked-about AI startups in tech circles and a rare Chinese-rooted AI company gaining significant global capital and adoption — before regulatory scrutiny emerged.

“Singapore Washing” and Regulatory Anxiety

The term “Singapore washing” has come up repeatedly in discussions around the Manus deal, referring to a pattern where Chinese tech firms relocate their headquarters or core operations to Singapore to access global capital, markets, and technology while ostensibly avoiding domestic regulatory constraints. Analysts say Beijing’s heightened attention to such relocations stems from concerns that this practice could enable efforts to sidestep export-control laws or diminish government oversight over mobile talent and strategic technology.

Examples of firms that have pursued similar relocation strategies — or are cited in debates over regulatory exposure — include:

• Tabcut, an AI startup that moved from Hangzhou to Singapore to escape capital constraints at home and tap global investors, driven by the dual pressures of U.S.–China tech competition and regional industry shifts.
• Manus (Butterfly Effect) itself, which repositioned its business hub to Singapore prior to its high-value deal with Meta, raising questions in Beijing about whether domestic technology was effectively exported prior to acquisition. 
• Terahop and DayOne, Chinese-linked firms that have established Singapore domiciles as part of efforts to hedge geopolitical risks and diversify market access.

While Singapore’s regulatory neutrality, trade agreements, and investor access make it attractive, experts caution that a Singapore address does not fully shield a company from national security, export-control, and outbound investment laws in China or the U.S., especially when underlying R&D and talent networks trace back to mainland jurisdictions. 

Regulatory Mechanics: What China Is Looking At

Chinese officials are examining several compliance dimensions in the review process:

• Export control compliance: Whether core AI technology developed in China is being transferred without an export licence;
• Outbound investment rules: Whether the transaction respects legal vetting for cross-border deals with potential strategic implications;
• Data and IP flows: How source code, algorithms, and trained models are handled in cross-border contexts.

This reflects a shift away from conventional merger review logic toward substance-over-form scrutiny — focusing not on deal size alone but on the substance of technology flow and strategic value. 

Meta’s Strategic Calculus and Asia’s Tech Leaders

From Meta’s perspective, the Manus acquisition fits a broader strategic pivot toward “general-purpose AI agents” — systems that can autonomously execute workflows across messaging, research, and enterprise tasks. Meta has stated plans to integrate Manus’s technology into its Meta AI product suite and other tools, enhancing its competitive position against rivals like OpenAI and Google.

However, the regulatory uncertainty in China complicates this strategy. While Manus’s Singapore base and discontinuation of China operations may limit Beijing’s leverage from a legal standpoint, the review process could still delay integration timelines or impose conditions that affect Meta’s deployment plans.

Broader Implications for Global AI M&A

The Manus review is significant not only for this transaction but as a precedent for future cross-border AI deals, particularly involving Chinese-origin technology firms. It underscores an evolving global landscape where geopolitical considerations and national security frameworks now intersect with startup exits and acquisition strategies.

For Asian AI startups and investors, the case highlights key takeaways:

• Cross-border exits involving strategic AI technology require early regulatory mapping;
• Singapore or other regional hubs may not fully insulate companies from domestic compliance scrutiny;
• Governments are increasingly treating AI technologies as national strategic assets, not just commercial products.

This shift suggests that M&A playbooks for AI companies in the region will need to incorporate regulatory strategy alongside product, market, and funding strategies.

A Test Case for AI Governance

Meta’s Manus acquisition marks a crossroads where technology, geopolitics, and regulatory oversight converge. China’s review — now underway and still in early stages — illustrates how governments are tightening their grip on outbound technology flows amid rising U.S.–China competition in AI and other frontier technologies.

While the outcome remains uncertain, the Manus case signals a broader trend: cross-border AI deals will increasingly be assessed not just on commercial merit, but on strategic and regulatory parameters. For startups in Asia and beyond, this evolving environment will shape how global ambitions are pursued — and how regulatory fences are navigated in the years ahead.

Quick Takeaways

• Chinese authorities have launched a regulatory review of Meta Platforms Inc.’s proposed acquisition of AI startup Manus, citing concerns over technology export controls and outbound investment rules.
• The deal, valued at more than $2 billion, is one of the largest AI acquisitions involving a startup with Chinese roots.
• Regulators are examining whether AI technology developed in China was transferred overseas without proper approval following Manus’s relocation to Singapore.
• The case has intensified scrutiny of so-called “Singapore washing,” where Chinese tech firms move headquarters abroad to access global capital and exits.
• Beijing appears concerned the transaction could set a precedent for other Chinese AI startups seeking overseas acquisitions.
• For Asian founders and investors, the review highlights growing regulatory risk around cross-border AI exits as governments treat advanced AI as a strategic asset rather than a purely commercial one.