Manus, the Chinese AI startup that sold itself to Meta for $2 billion, is facing scrutiny from Beijing. According to a report by the Financial Times, Manus co-founders Xiao Hong and Ji Yichao were summoned to a meeting with China's National Development and Reform Commission and told they wouldn't be leaving the country for a while.
Manus burst onto the scene last year with a demo video showing an AI agent screening job candidates, planning vacations, and analyzing stock portfolios. The company claimed it outperformed OpenAI's Deep Research, and within weeks, Benchmark led a $75 million funding round at a $500 million valuation.
By December, Manus had millions of users and was pulling in over $100 million in annual recurring revenue. Meta then acquired the company for $2 billion, with Meta pledging to cut all ties with Manus's Chinese investors and shut down its operations in China entirely.
The Regulatory Review
No formal charges have been filed, but the inquiry is looking into whether the Meta deal violated Beijing's foreign investment rules. Beijing is calling it a routine regulatory review, but the stakes of the AI race make this a high-profile case.
Manus had actively tried to operate outside China's orbit, relocating its headquarters and core team from Beijing to Singapore and restructuring its ownership. However, China has a history of taking action against companies that it perceives as operating outside its control.
Market Context
The US and China are engaged in an all-out race to build the most powerful AI on the planet, with Beijing throwing billions at homegrown models and tightening its grip on the tech sector. The Manus acquisition by Meta has raised eyebrows in Washington and sparked a reaction from Beijing.
As reported by the New York Times, China is watching nervously as its best AI talent gravitates to US companies. The country has a phrase for homegrown AI companies that move abroad and sell themselves to foreign buyers: 'selling young crops.'
What's Next
With the inquiry into the Meta deal ongoing, Manus's founders are apparently not going anywhere until Beijing gets the answers it wants. The outcome of this case will be closely watched, given the high stakes of the AI race and the increasingly complex relationship between the US and China in the tech sector.
