The startup Manus came into being and within a few months reached hundreds of millions of dollars in annual revenue. Around the turn of the year, Meta acquired it for $2 billion.
Manus and Its Agents
Manus was founded in China in 2022. Its founders, CEO Xiao Hong and chief scientist Ji Yichao, built something the technology world had long been seeking: a general-purpose AI agent capable of independently handling complex tasks. Research, coding, planning, data analysis—all without a person having to guide it step by step. It was essentially a full-time digital employee.
The company quickly relocated to Singapore, secured investment from the American venture capital firm Benchmark Capital, and by the end of 2025 had more than 2 million users and annual revenue exceeding $100 million. Meta agreed to the deal and announced the acquisition in December 2025.
Beijing Is Not Happy
However, Manus still has subsidiaries registered in China. Beijing Butterfly Effect Technology and its sister company Beijing Red Butterfly Technology, along with their branches in Wuhan, have never left the Chinese corporate registry. And that proved to be a problem. In January 2026, China’s Ministry of Commerce announced that it would investigate whether the acquisition violated Chinese regulations on technology export controls and foreign investment. It was a warning shot. But it was not until March that the situation fully escalated.
Xiao Hong and Ji Yichao were summoned to a meeting in Beijing with the National Development and Reform Commission (NDRC), one of the country’s most powerful economic authorities. After that meeting, they received a clear message: they would not be leaving China. They may travel within the country, but the borders are closed to them. As the Financial Times reported, citing three sources familiar with the case, no formal charges have yet been brought. Nevertheless, Manus is seeking legal assistance.
What Does China Actually Want?
Beijing openly talks about a phenomenon it calls "selling young crops". This refers to situations in which Chinese founders build a promising technology startup, move it abroad, and then sell it to an American company. From the Chinese government’s perspective, this is how strategic technologies—and AI agents undoubtedly count among them—flow to a geopolitical rival.
Manus has become a symbol of this trend. It inspired a generation of Chinese founders to pursue global ambitions, which is precisely why so many people are watching its case. By intervening here, Beijing is sending a message to the entire industry.
The alleged violation of foreign direct investment rules concerns Chinese reporting obligations following a change of ownership. According to FT sources, it is not a violation that would normally lead to severe penalties. However, the authorities are looking for leverage to intervene in the deal.
What Does Meta Get Out of It?
Meta acquired Manus as part of Mark Zuckerberg’s strategy to move beyond conversational AI tools toward genuine AI agents that actively work on users’ behalf. Manus’s technology was intended to strengthen products such as Meta AI, WhatsApp, Facebook, and Instagram. Zuckerberg’s team closed the deal in just ten days, and the software’s integration into Meta’s platform has already begun.
That is precisely why reversing the transaction would be, as one Financial Times source put it, "very messy". The deal has been completed, and the technology is being integrated. Unwinding the entire transaction would be an unprecedented step. Meta has so far responded calmly. "The transaction fully complied with applicable laws. We expect an appropriate resolution to this review," a company spokesperson told Reuters.
Chinese authorities have not yet initiated any formal proceedings and, according to FT sources, have not yet decided whether to take such a drastic step at all. The review is still in its early stages, and the authorities may decide not to intervene.
Another source: americanbazaaronline.com
