Manus story unfolds: What’s happening right now

The U.S. and China are engaged in a fierce competition to develop the world’s most advanced artificial intelligence. Beijing is investing billions into domestic models, tightening its control over the technology sector, and closely monitoring the trend of top Chinese AI talent moving to American firms. A late 2023 study by the Carnegie Endowment revealed that 87 of the 100 leading Chinese AI researchers at U.S. institutions in 2019 remain there.

Despite this backdrop, Manus, a highly prominent Chinese AI startup, quietly moved its operations to Singapore and was acquired by Meta for $2 billion. Few observers questioned the implications of this partnership.

As industry experts are aware, Manus gained attention in the spring of last year with a demo video showcasing an AI agent capable of screening job candidates, planning vacations, and analyzing stock portfolios, while boldly claiming superiority over OpenAI’s Deep Research. Within weeks, Benchmark, a leading Silicon Valley venture capital firm, led a $75 million funding round, valuing the company at $500 million. This move drew criticism, including from Senator John Cornyn, who tweeted, “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.”

By December, Manus had attracted millions of users and generated over $100 million in annual recurring revenue. Meta, with Mark Zuckerberg betting the company’s future on AI, acquired the startup for $2 billion.

Notably, Manus did not simply sell to an American company; it spent much of last year actively distancing itself from China. The company moved its headquarters and core team from Beijing to Singapore, restructured its ownership, and, following the Meta acquisition, Meta pledged to sever ties with Manus’s Chinese investors and completely shut down its operations in China. By all accounts, Manus was positioning itself as a Singapore-based entity.

While these developments may have raised concerns in Washington, the reaction in Beijing was likely far more intense.

China refers to this phenomenon as “selling young crops”—a term for homegrown AI companies that relocate abroad and sell to foreign buyers before fully maturing, taking their intellectual property and talent with them.

Beijing strongly opposes this practice and has spent years ensuring no company operates beyond its reach. Many recall how Jack Ma, after mildly criticizing Chinese regulators in a 2020 speech, disappeared from public view for months, leading to the cancellation of Ant Group’s massive IPO and a $2.8 billion fine for Alibaba. Over the next two years, Chinese authorities systematically dismantled parts of its booming tech sector, erasing hundreds of billions in market value. Chinese leaders are known for being direct, not subtle.

Therefore, it was hardly surprising when the Financial Times reported on Tuesday that Manus co-founders Xiao Hong and Ji Yichao were summoned to a meeting with China’s National Development and Reform Commission this month and informed they would not be allowed to leave the country for the time being. No formal charges have been filed; instead, authorities are investigating whether the Meta deal violated Beijing’s foreign investment regulations.

Beijing describes this as a standard regulatory review.

At some point, someone at Manus may have believed they had succeeded, and perhaps they still will. However, given the high stakes of the AI race, this was always a significant risk. Now, Beijing demands answers; Manus’s founders appear to be staying put until they receive them.