In January 2026, the Chinese government announced an official investigation into Meta’s acquisition of AI startup Manus, a deal reportedly valued at over $2 billion. The probe highlights growing tensions in the U.S.–China technology rivalry, particularly around artificial intelligence, which Beijing increasingly views as a strategic national asset.
The investigation is being led by China’s Ministry of Commerce (MOFCOM) and centers on whether the acquisition complied with the country’s strict technology export and overseas investment regulations. At the heart of the case is Manus’ advanced general-purpose AI agent, capable of autonomously performing complex tasks such as coding, data analysis, and website development.
Why Manus Is Under Scrutiny
Although Manus is currently headquartered in Singapore under its parent company Butterfly Effect Pte, Chinese regulators argue that the startup has “Chinese roots.” The company was founded by Chinese engineers and originally linked to Beijing-registered entities before its restructuring abroad.
MOFCOM is examining whether the transfer of technology, intellectual property, and technical staff from China to Singapore required an export license under Chinese law. If authorities determine that sensitive AI technology was moved offshore without approval, the transaction could be deemed a violation of national export control rules.
Meta’s Position and Compliance Strategy
In response to the investigation, Meta stated that following the acquisition, there will be no ongoing Chinese ownership in Manus AI. The company also confirmed that Manus will cease all operations and services within China, a move seen as an effort to distance the acquisition from Chinese jurisdiction.
While Meta has not disclosed further operational details, analysts believe the company is attempting to demonstrate regulatory compliance while protecting its long-term AI ambitions.
Strategic Implications for Global AI Markets
Experts view Beijing’s action as a significant escalation in AI governance enforcement. As AI agents become foundational to software development, automation, and enterprise workflows, China is increasingly using export control laws to prevent domestic innovation from strengthening foreign competitors without state oversight.
This case could set a precedent for how China handles future acquisitions involving AI startups with Chinese origins, even if they are legally based overseas.
Meta’s Broader China-Related Challenges
The Manus investigation follows a series of China-linked controversies for Meta in late 2025. A December 2025 report accused the company of allowing nearly $3 billion in fraudulent ads from China to remain on its platforms to protect advertising revenue. Earlier, in April 2025, former Meta executive Sarah Wynn-Williams testified before the U.S. Senate, alleging that Meta had explored cooperation with Chinese authorities on censorship tools and data-sharing initiatives.
Together, these developments place Meta at the center of intensifying scrutiny as geopolitical tensions reshape the global AI landscape.
