The Chinese government has launched a full-fledged investigation into Facebook parent Meta's acquisition of AI startup Manus. As the United States pressures Chinese technology corporations under the banner of national security, China appears to be countering with technology export controls as its weapon. Beyond simple retaliation, this signals Beijing's strong intent to block at the source the outflow of core technologies and talent overseas.
On the 8th (local time), China's Ministry of Commerce announced it would begin a review and investigation into whether Meta complied with technology export controls and outbound investment rules in acquiring Manus. Spokesperson He Yadong said at a briefing that day, "The Ministry will work with other regulators to assess whether the contract concluded by Meta and Manus complies with China's regulations on technology imports and exports and outbound investment."
The amount Meta released in December last year for the acquisition of Manus is estimated at up to $2.5 billion (about 3.63 trillion won). It is large enough to rank in the top five among major AI-related transactions. However, the two sides did not disclose specific deal terms. Manus is one of the most watched AI agent corporations in Silicon Valley recently. It made a big splash in the industry by unveiling tools that, upon user instruction, build websites or perform coding tasks on their own. As of December last year, it surpassed $100 million (about 133 billion won) in annual recurring revenue (ARR), showing rapid growth and earning reviews that it has secured a foothold in the market.
The issue is that Manus has roots in China. Manus was founded in 2022 in Beijing by Chinese engineers. Its core AI product development also took place in mainland China. But as U.S.-China tensions flared last year, Manus moved its headquarters from Beijing to Singapore. The move was intended to avoid geopolitical risk by changing its residence on paper and to create a favorable environment for a U.S. corporation like Meta to propose an acquisition. The Chinese government labeled this "technology leakage" and applied the brakes.
Industry watchers interpreted the investigation as a warning to Chinese startups attempting so-called Singapore washing. Singapore washing refers to the practice, like Manus, of moving headquarters to Singapore to evade regulation and surveillance in China. According to the state-run China Daily, a key question in the probe will be whether Manus exported technology without government approval during the process of relocating not only its headquarters but also its core team.
Winston Ma, a professor at New York University School of Law and a partner at Dragon Capital, said in an interview with The Wall Street Journal (WSJ), "If this personnel move is wrapped up without any issues, it will present a new escape route for young AI startups in China."
From Beijing's perspective, it cannot simply leave unchecked the trend of promising corporations being absorbed into the U.S. ecosystem via Singapore like Manus. On WeChat and other Chinese social networking services (SNS), warnings have surfaced that Manus founders could face criminal punishment if they exported restricted technologies without approval. Cui Fan, a professor at the University of International Business and Economics in Beijing, wrote on his blog, "When establishing technology export regulations, Chinese authorities must consider both corporate growth potential and national security."
The situation mirrors the past case in which the United States sought to force out TikTok, the SNS operated by Chinese corporation ByteDance Ltd. During his first term, President Donald Trump pressured the sale of TikTok's U.S. operations, citing national security threats. At the time, China revised its technology export control list to prevent TikTok's core algorithm from going overseas without government approval. The Manus probe applies the same logic. Under Chinese law, exporting certain technologies, including Conversational AI systems, requires government approval.
The mood in the United States contrasts with China's. Some view Meta's acquisition of Manus as "evidence that Chinese AI talent is naturalizing into the U.S. ecosystem." The Financial Times (FT), citing experts, said, "This transaction shows that the U.S. AI ecosystem is currently more attractive than China's."
It remains uncertain whether Meta can integrate Manus' technology into its own products as planned. If China's Ministry of Commerce concludes the deal violates technology export controls, the acquisition will be scrapped. Moreover, they could face hefty fines. For Meta, acquiring Manus is its largest AI move since investing $14.3 billion (about 19 trillion won) in Scale AI in June last year. If the acquisition falls through or large fines are imposed, it would seriously disrupt Meta's future AI plans.
Experts said the United States and China are treating corporate mergers and acquisitions (M&A) as national contests, increasing uncertainty in corporate management. In the past, economic logic—capital and technology combinations—often took precedence over geopolitical logic. Now, however, competitive logic aimed at blocking the other side's technology acquisition prevails, they said.
The conflict between Washington and Beijing over securing Nvidia chips can be understood in the same context. As the United States blocks exports of high-performance AI chips, China has encouraged domestic corporations to buy homegrown chips while warning about the risks of using Nvidia products. As a result, startups like Manus are experiencing severe confusion between two choices: expanding into global markets or settling for China's domestic market.
Spokesperson He Yadong said, "The Chinese government supports mutually beneficial international technology cooperation pursued by corporations," but added, "Cross-border investments, data exports, and cross-border acquisitions must comply with Chinese laws and regulations and go through proper procedures."