China Expands Review of Meta’s $2 Billion Deal for AI Startup Manus

The probe initially focused on whether the December acquisition breached China’s technology export controls or national security rules. Now, authorities are also examining possible violations involving cross-border currency flows, tax reporting and overseas investment regulations, according to Bloomberg, which cited people familiar with the matter. The core concern remains whether sensitive Chinese technology or user data may have been shared with a U.S. company, per Bloomberg.

The expanded investigation underscores the heightened attention surrounding one of Meta’s rare takeovers of an Asian technology firm. The deal represents another major investment in artificial intelligence by Meta co-founder Mark Zuckerberg, who has positioned the company as a leading developer of AI systems designed to perform tasks for users. Meta said the purchase, completed in roughly 10 days, would strengthen its broader AI strategy.

At the same time, the transaction has fueled unease in Beijing about whether an American firm is gaining control of advanced AI tools and data that originated in China. Manus was founded by Chinese entrepreneurs and operates under its parent company, Butterfly Effect. The business began in China before shifting its headquarters and much of its workforce to Singapore, where it attracted early U.S. investors such as Benchmark, according to Bloomberg.

Although the review is still in its early stages and could end without penalties, some officials have privately expressed support for Manus following the announcement of the deal, people familiar with the situation told Bloomberg. They also noted that the startup’s backers have already received their payouts, which could make reversing the transaction difficult in practice.

Related: China Scrutinizes Meta’s $2 Billion AI Deal Over Security and Export Risks

Nevertheless, the deal has stirred debate because it marks a major U.S. tech company acquiring a high-profile startup of Chinese origin, one that has been compared to global AI leaders such as OpenAI and DeepSeek. Representatives for both Meta and Manus declined to comment, and China’s Commerce Ministry did not respond to requests for comment, according to Bloomberg.

The investigation has also highlighted a trend known in the industry as “Singapore-washing,” a term used to describe Chinese-founded companies that relocate to Singapore to expand internationally. The city-state has become a popular base for firms such as Shein, partly because of its large ethnic Chinese population and business-friendly environment, per Bloomberg.

Manus began transferring staff from Beijing and Wuhan to Singapore in July, parting ways with employees who chose not to relocate. That move drew the attention of Chinese regulators, who privately raised concerns about cross-border data handling and tax issues, according to Bloomberg.

While Manus has focused on overseas markets and never launched its main AI product in China, one of Butterfly Effect’s earlier offerings — a Chrome extension called Monica — remains available there. Regulators had not previously opened a formal inquiry because they believed the company would retain strong links to China, Bloomberg reported.

Source: Bloomberg