Okay, so the United States and China are engaged in an all-out race to build the most powerful AI on the planet. Beijing is investing billions in local models, strengthening its grip on the tech sector and nervously eyeing its top AI talent. gravitates toward American companies. However, Manus, one of China’s most talked-about AI startups, quietly moved to Singapore and sold to Meta for $2 billion.
Did anyone think there would be No Will there be a reckoning over this link?
As industry watchers know, Manus burst onto the scene in the spring of last year with a demo video showing an AI agent screening job candidates, planning vacations, and analyzing stock portfolios, and he brazenly claimed that it outperformed OpenAI’s Deep Research. In a matter of weeks, Benchmark, the accomplished Silicon Valley venture firm, led a $75 million funding round at a $500 million valuation. That was surprising. (Senator John Cornyn had thoughts, tweeting at the time, “Who thinks it’s a good idea for American investors to subsidize our biggest adversary in AI, only for the CCP to use that technology to challenge us economically and militarily? Not me.”)
By December, Manus had millions of users and was generating more than $100 million in annual recurring revenue. Then Meta called and Mark Zuckerberg, who had bet the company’s future on AI, acquired it for $2 billion. That was surprising too.
It’s worth noting that Manus wasn’t simply sold to an American buyer; It spent most of last year actively trying to operate outside China’s orbit. The company moved its headquarters and core team from Beijing to Singapore, restructured its ownership, and after the deal with Meta was announced, Meta promised to cut all ties with Manus’ Chinese investors and completely closed its operations in China. In every way, Manus was trying to become a Singapore company.
But if that series of events raised eyebrows in Washington, we can only imagine that Beijing was apoplectic.
China has a phrase for all this: “sale of young crops”: local AI companies moving abroad and selling to foreign buyers before they have fully matured, taking their intellectual property and talent with them.
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Beijing also hates it and has been establishing for years that no company operates outside its reach. Surely we all remember that time Jack Ma gave a speech in 2020, mildly criticizing Chinese regulators, after which he disappeared from public life for months, Ant Group’s successful initial public offering was canceled overnight, and Alibaba was fined $2.8 billion. China then spent the next two years methodically dismantling its own booming technology sector, wiping out hundreds of billions in market value. Chinese leaders are many things, but subtlety is not one of them.
So it wasn’t entirely surprising when, on Tuesday, the Financial Times reported that Manus co-founders Xiao Hong and Ji Yichao were summoned this month to a meeting with China’s National Development and Reform Commission and told that I wouldn’t leave the country for a while.
No formal charges have been filed, only an investigation into whether the Meta deal violated Beijing’s foreign investment rules.
Beijing calls it a routine regulatory review.
At some point, someone on Manus probably thought they had gotten away with it, and maybe they still do. But given what’s at stake in the AI race, that was always a big bet. Now Beijing wants answers; Apparently the founders of Manus aren’t going anywhere until Manus gets them.
