US regulators welcomed Meta’s $2 billion December acquisition of AI-assistant platform Manus, while Chinese regulators were far less receptive.
Manus AI agents help execute tasks, such as screening resumes, creating trip itineraries, or analyzing stocks.
For Meta CEO Mark Zuckerberg, Manus is a worthwhile target. Its agents can be swiftly integrated into Meta’s apps, but its Asian roots are difficult to digest. Manus was created by Chinese entrepreneur “Red” Xiao Hong and originally had its headquarters in Beijing.
Fortunately for Meta, Xiao decided last summer to relocate the startup to Singapore. The move alleviated US regulators’ worries about a potential Chinese interference into American business. However, it didn’t address Chinese fears. If one of its startups could escape to a friendlier country, it would encourage other Chinese tech firms to relocate abroad and transfer their technology to the US.
China’s commerce ministry in January deepened an investigation into the acquisition. Moving to Singapore doesn’t place Manus beyond Beijing’s jurisdiction. Xiao remains a Chinese citizen and his company’s obligations didn’t disappear with relocation. Chinese regulators are looking into potential violation of techexports controls.
The issue: Will user data be compromised or shared with Manus’ American parent? There are also questions about national security and cross-border rules governing currency flows, tax accounting, and overseas investments.The investigation could lead to a worstcase scenario: the cancellation of the acquisition.
Through Manus, Beijing is sending a warning to the Chinese community: Relocation will not exempt them from domestic oversight. Still, promising companies are already looking for greener pastures abroad. HeyGen, an AI video company, moved to Los Angeles. WIZ.AI, a conversational startup, went to Singapore, as did Tabcut, an expert in TikTok data analytics.
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