Beijing probes Manus founders following $2 billion Meta deal

Meta has acquired Manus for $2 billion. The transaction follows the startup’s relocation of its headquarters and core team from Beijing to Singapore, where the company attempted to make itself a Singapore company.

Before the acquisition, Manus grew after bursting onto the scene in the spring of last year. The startup claimed its technology outperformed OpenAI’s Deep Research. Benchmark, a Silicon Valley venture capital firm, led a $75 million funding round for Manus at a $500 million valuation. By December, the startup had millions of users and over $100 million in annual recurring revenue—a standard business metric for subscription-based revenue.

This movement of a Chinese-founded startup to foreign ownership highlights a phenomenon known in China as “selling young crops,” where homegrown AI companies relocate abroad and sell to foreign buyers before reaching maturity. The trend has drawn criticism from U.S. lawmakers. Senator John Cornyn criticized American venture backing of such firms, asking, “Who thinks it is a good idea for American investors to subsidize our biggest adversary in AI, only to have the CCP use that technology to challenge us economically and militarily? Not me.”

The transaction has now triggered a regulatory response in China. On Tuesday, the Financial Times reported that Manus co-founders Xiao Hong and Ji Yichao were “summoned to a meeting this month with China’s National Development and Reform Commission and told that they wouldn’t be leaving the country for a while.” The National Development and Reform Commission is the Chinese government agency responsible for economic planning and regulatory oversight.

The agency has launched an “inquiry into whether the Meta deal violated Beijing’s foreign investment rules.” While Beijing frames the action as a routine review, the move echoes previous crackdowns on high-profile tech figures. In 2020, Jack Ma criticized Chinese regulators, after which Ant Group’s planned initial public offering was halted and Alibaba was penalized with a $2.8 billion fine.

Meta has pledged to cut all ties with Manus’s Chinese investors and shut down its operations in China. However, the regulatory pressure on the founders remains. The co-founders apparently cannot leave the country until Beijing gets answers.

Why it matters

The acquisition of a Chinese AI startup by Meta, following the startup’s relocation to Singapore, has triggered a regulatory crackdown from Beijing, highlighting the intense geopolitical stakes of the AI race.