China has launched a regulatory investigation into Meta’s acquisition of Manus, a Chinese AI startup, signaling Beijing’s determination to prevent the exodus of domestic AI talent and technology to US companies. The probe, confirmed by China’s Ministry of Commerce, will examine whether the $2 billion+ deal complies with the country’s export control laws and regulations.
Manus, launched in China in March 2024 by AI product studio Butterfly Effect, gained international attention for developing a “general-purpose” AI agent capable of conducting tasks with minimal human supervision. The startup relocated to Singapore in mid-2025, and Meta announced its acquisition in December, with plans to completely sever Manus’ ties with China.
Analysts describe this probe as particularly significant because it appears designed to discourage “Singapore washing” — the practice of relocating companies from China to Singapore to avoid regulatory scrutiny. Companies like ByteDance (TikTok’s parent) and Shein have previously employed this strategy. The investigation also serves as a warning to Chinese AI startups considering partnerships or acquisitions by US firms.
Wendy Chang, senior analyst at the Mercator Institute for China Studies, emphasized that Beijing’s probe represents “an effort to prevent the loss of AI technology and talent to foreign acquisition, especially to the US.” Meta has stated it plans to bring over Manus’ top leadership and operate the AI agent platform separately while integrating the technology into its own products.
The investigation marks a new phase in US-China tech competition, moving beyond semiconductor export controls to encompass AI models, agents, talent, and enterprise deployment. Murthy Grandhi from GlobalData noted this shift represents an expansion of the battleground from chips to broader AI ecosystem components.
Hanna Dohmen from Georgetown’s Center for Security and Emerging Technology called the approach “more novel” because it “appears to focus on the movement of talent and IP” rather than just technology transfers. The probe could signal China’s intention to police “outbound AI technology transfer with greater rigor,” potentially accelerating the bifurcation of global AI ecosystems.
While the investigation’s duration remains unclear — similar probes have taken over a year — analysts suggest the most likely outcome is conditional approval rather than an outright block, though the move sends a clear warning to other foreign companies considering similar acquisitions of Chinese AI assets.
Key Quotes
I see Beijing’s probe as an effort to prevent the loss of AI technology and talent to foreign acquisition, especially to the US.
Wendy Chang, senior analyst at the Mercator Institute for China Studies, explained the strategic motivation behind China’s investigation, highlighting Beijing’s concern about brain drain in the critical AI sector.
The battleground has moved from beyond chips to models, agents, talent, and enterprise deployment.
Murthy Grandhi, company profiles analyst at GlobalData, described how US-China tech competition is evolving beyond semiconductor restrictions to encompass the entire AI ecosystem, including human capital.
Whatever the outcome may be, this certainly sends a signal to other US or foreign companies that are considering similar acquisitions.
Hanna Dohmen from Georgetown’s Center for Security and Emerging Technology emphasized the broader deterrent effect of the probe, suggesting it will make foreign companies think twice before acquiring Chinese AI startups.
Our Take
This probe represents a critical escalation in the global AI arms race, with China demonstrating it won’t passively watch its AI talent and technology migrate to US competitors. The focus on “Singapore washing” is particularly shrewd — Beijing is closing a loophole that allowed Chinese companies to rebrand as international entities while maintaining their technological DNA. What’s most significant is the shift from hardware to human capital: China recognizes that in AI, talent matters as much as chips. This could fundamentally reshape how international AI deals are structured, forcing companies to choose sides in an increasingly bifurcated global AI ecosystem. The investigation also reveals China’s growing confidence in its AI capabilities — it’s no longer just playing defense against US restrictions but actively protecting its own strategic assets. Expect more countries to follow suit with similar talent-retention measures.
Why This Matters
Related Stories
- Meta and Nvidia Billionaires’ Wealth Soars $152B in AI Boom
- Nvidia faces US probe over potential export rules violations to China
- How to Comply with Evolving AI Regulations
- OpenAI’s Competition Sparks Investor Anxiety Over Talent Retention at Microsoft, Meta, and Google
- Big Tech’s 2025 AI Plans: Meta, Apple, Tesla, Google Unveil Roadmap