Mehta’s Manus news is received differently in Washington and Beijing

Meta’s $2 billion acquisition of AI assistant platform Manus has understandably been embroiled in a regulatory tug-of-war, but it’s not the fault of U.S. regulators. Despite previous concerns about Benchmark’s investment in Manus, both companies appear confident the deal is legal. However, Chinese regulators are reportedly less optimistic, according to the Financial Times.

When Benchmark led a funding round for Manas earlier this year, the investment immediately sparked controversy. U.S. Sen. John Cornyn complained about the company’s dealings with Company X, and the investment prompted an investigation by the U.S. Treasury into new rules restricting U.S. investment in Chinese AI companies.

This concern was significant enough to spur Manus’ eventual move from Beijing to Singapore, and was part of the driver for the company’s “gradual disengagement from China,” as one Chinese professor explained on WeChat over the weekend.

Now the tables have turned. Chinese authorities are reportedly considering whether the Meta deal violates technology export controls and could give the Chinese government leverage not initially granted. Specifically, Manus is considering whether it will need an export license to move its core team from China to Singapore, a move that now appears to have become so common that it has earned the nickname “Singapore washing.” A recent Wall Street Journal article speculated that China “has little leverage to influence the deal given Mr. Manus’s foothold in Singapore,” but that assessment may have been premature.

Beijing is concerned that the deal could lead to more Chinese startups physically relocating to avoid domestic scrutiny. Winston Ma, a New York University law professor and partner at Dragon Capital, told WSJ that if the deal closes smoothly, it will “open up new avenues for young Chinese AI startups.”

History suggests that the Chinese government may act. China had previously used similar export control mechanisms to intervene in attempts to ban TikTok during Trump’s first term. A Chinese professor on WeChat even warned that Manus’ founders could face criminal charges if they export restricted technology without permission.

Some U.S. analysts, meanwhile, have billed the acquisition as a victory over Washington’s investment restrictions and say it signals the defection of Chinese AI talent to the U.S. ecosystem. One expert told the FT that the deal shows that “the US AI ecosystem is now more attractive”.

It’s too early to know whether this will affect Meta’s plans to integrate Manus’ AI agent software into its products, but the $2 billion deal may have been more complicated than anyone expected.