In a sign that Beijing is drawing a hard line against the “flight” of strategic AI talent and technology, Chinese authorities are intensifying their investigation into Meta’s blockbuster purchase of the AI-agent startup Manus — even though the deal was structured as the acquisition of a Singapore-based company.
The $2 billion transaction, closed in December 2025, has become one of the most politically charged tech deals of the year.
The Lightning Rise of Manus
Manus burst onto the scene in early 2025 with a bold promise: fully autonomous AI agents capable of writing code, analyzing complex data, conducting research, and handling multi-step workflows with minimal human oversight. By early December 2025 the company announced it had reached $100 million in annual recurring revenue — an astonishing pace for a startup less than a year old.
Days later, Meta announced it was buying the entire operation for $2 billion.
Beijing’s Growing Alarm
The deal immediately raised red flags in Beijing.
- In early January 2026, the Financial Times reported that Chinese regulators had launched a review focused on potential illegal technology exports.
- By late January, Bloomberg revealed a much broader investigation examining violations of export controls, user data protections, and national security rules.
- On March 17, 2026, the New York Times published the most detailed account yet: Chinese officials have summoned representatives from both Meta and Manus, expressed “serious concerns,” and are actively working to prevent key executives from leaving China for Singapore. Authorities are reportedly considering holding individuals criminally accountable.
The message from Beijing is clear: this case will not be quietly swept under the rug.
Chinese or Singaporean? The Great Relocation Debate
Originally, Manus (and its parent company Butterfly Effect) was 100% Chinese, founded and headquartered on the mainland with Chinese founders and most of its team.
- In spring 2025 it raised a $75 million round led by the prominent U.S. venture firm Benchmark — a deal that itself drew criticism in Washington for “funding a Chinese competitor.”
- Then, in the summer of 2025, the company executed a rapid relocation to Singapore. Two-thirds of the staff (dropping from ~120 to ~40 people) chose not to move. By the time Meta signed the papers in December, Manus was legally a Singaporean entity.
Chinese regulators, however, appear unconvinced by the paperwork shuffle. Insiders say the government views the move as an attempt to “launder” a strategically important AI project out of the country — and the current investigation is intended to serve as a loud warning to other Chinese founders considering the same Singapore loophole.
The Founder’s Track Record
The speed of Manus’s rise looks almost too good to be true — from zero to $2 billion exit in under a year. But its main founder, Xiao Hong (who goes by Red Xiao), is no newcomer.
- 2015: Founded Nightingale Technology (AI assistants for enterprises, backed by Tencent);
- 2022–2024: Built Monica AI (a popular browser-based LLM aggregator);
- 2025: Launched Manus.
Ten years of deep AI experience helps explain how a brand-new company could scale so explosively.
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The Bigger Picture
This is not an isolated incident. China is increasingly determined to prevent its best AI talent and technology from leaving through legal loopholes, relocations, or foreign acquisitions. With U.S.–China tech tensions at historic highs, Beijing sees every high-profile exit as a potential national security loss.
Meta, for its part, has remained largely silent on the unfolding investigation.
The central question now hanging over the entire deal is simple: **Whose startup was Manus really?**
China says it was always theirs.
The founders and Meta say it became Singaporean fair and square.
The answer — and the potential consequences for everyone involved — will likely be decided in Beijing’s investigation rooms rather than in a Singapore courtroom.
Poll
Who do you side with in this fight?
China — You can’t just relocate strategic AI talent and call it a day.
The startup — Founders should be free to move and sell wherever they want.
Drop your vote below. The world is watching how this one ends.
