A look into China's probe of Meta's $2B Manus AI Acquisition

Meta’s recent $2 billion acquisition of Singpore-based AI startup Manus has fallen under scrutiny from China’s Ministry of Commerce over potential violations of technology and overseas regulation – signaling a possible slowdown in Meta’s AI roadmap.

Founded by Xiao Hong and co-founders Ji Yichao and Zhang Tao in 2022, Manus – an agent that lets users automate research, coding and workflows – originated in China but moved its headquarters to Singapore in mid-2025 upon it’s official launch.

It wasn’t long before it quickly gained a reputation as an industry leader in AI agents, boasting an annual recurring revenue north of $100 million within just months of product debut.

The strategic urgency behind Meta’s acquisition of Manus AI

Meta’s acquisition of Manus reflects a sharpened corporate focus on keeping pace with competitors like OpenAI and Google. In early 2025, Meta invested $14.3 billion in Scale AI and acquired additional AI startups, underscoring a rapid pivot toward prioritizing product-ready AI tools.

The acquisition not only brings Meta cutting-edge technology but also a team of highly skilled AI engineers and scientists, including Manus’s founders, who are expected to work closely with Meta’s AI teams.

This expands Meta’s competitive edge in the escalating race to deliver digital assistants that can operate autonomously, with plans to now introduce Manus into Facebook, Instagram and WhatsApp.

What does China’s probe really mean?

China’s Ministry of Commerce is conducting a comprehensive review of the Manus acquisition with a focus on possible export control violations, examining whether the relocation of Manus’s operations to Singapore was a strategic move to avoid Chinese export regulations.

Experts suggest, however, that rather than outright blocking the deal, China’s probe could result in extended approval processes or conditions placed on the future use of Chinese-developed technology within Manus under Meta’s ownership.

Such regulatory friction could introduce uncertainty for integration timelines and the scope of deployment, but it also positions China as an influential stakeholder in a major U.S.-led tech acquisition.

The growth that caught Meta’s attention

Manus’s roots trace back to Butterfly Effect, founded by Xiao Hong, a serial entrepreneur known for developing AI productivity tools, including AI assistant Monica. As the demand for sophisticated AI grew, Butterfly Effect spun off Manus as a standalone venture focused on creating general-purpose AI agents that could perform a broad range of tasks without human intervention.

With a rapidly expanding team spread across Singapore, Tokyo, and San Francisco, Manus moved quickly to productize and monetize its AI agent technology. As a result, it attracted significant capital through a $75 million funding round led by the U.S. venture capital firm Benchmark in early 2025, demonstrating confidence from global investors in its growth potential.

Its swift progress helped Manus generate over $100 million in annual recurring revenue within less than a year – a trajectory and strategic opportunity that soon caught the attention of Meta.

What this means for founders and the global AI startup ecosystem

The Manus acquisition underscores the increasingly international nature of AI innovation and the nuanced challenges that founders face in navigating global regulations and geopolitics.

Could the pathway carved by Manus highlight a potential playbook for startups seeking strategic growth and the management of international complexities?

For founders, understanding these dynamics becomes crucial not just for successful exits but also for shaping technology products that can scale globally under complex legal frameworks. The Manus story reveals how innovation can often outpace regulation – but it never quite escapes it.