Chinese regulators have initiated an initial review into Meta Platforms Inc.'s $2 billion acquisition of artificial intelligence startup Manus, focusing on potential violations of national security and technology export rules. The deal, which was announced and closed in December 2024, is being examined by China's Ministry of Commerce.
The review centers on the AI technology developed by Manus while it was based in China, despite the company now being headquartered in Singapore. Officials are assessing whether the transfer of this technology through the acquisition breaches existing regulations. A key area of scrutiny is Manus's "agentic AI" systems, which are designed to autonomously perform tasks such as booking flights, market research, coding, and data analysis.
The investigation is currently in its early, informal stages, and there is no certainty that Beijing will ultimately intervene. However, if the review escalates into a formal probe and violations are found, potential outcomes could range from financial penalties to demands for specific conditions to be met before the transaction is approved.
The move underscores Beijing's growing regulatory focus on advanced AI technologies developed domestically, even when companies relocate overseas. This case parallels the ongoing scrutiny of ByteDance Ltd.'s proposed sale of TikTok's U.S. operations, highlighting China's cautious approach to outbound transfers of sensitive technology in strategic sectors.
Manus, which originated under Chinese parent company Butterfly Effect (Monica.Im), achieved remarkable growth, hitting $100 million in annual recurring revenue just eight months after launching its product in March 2024. The company raised $75 million from U.S. venture firm Benchmark earlier in 2024, a move that had already drawn criticism from American lawmakers concerned about AI firms with Chinese ties.
