In a landmark deal that could reshape the landscape of global artificial intelligence investment, Meta Platforms announced the acquisition of the AI startup Manus for a staggering $2.5 billion. The transaction, which includes a $500 million employee retention pool, marks a strategic pivot for the social media giant and offers a potential blueprint for China-linked tech firms seeking Western capital amid geopolitical tensions.
Strategic Moves and Singapore Shift
The journey of Manus, whose core product is an advanced AI agent capable of complex tasks like generating detailed research reports, is a tale of strategic navigation. Founded under the parent company Butterfly Effect by Chinese entrepreneurs Xiao Hong ("Red") and Ji Yichao ("Peak"), the startup initially operated with a significant research and engineering base in China.
However, sensing the headwinds, its founders made calculated decisions to distance the company from its Chinese origins. A critical move was relocating its headquarters to Singapore in 2024. This shift, along with shelving plans for a Chinese version with Alibaba and turning down investment from local Chinese governments, was pivotal in easing U.S. regulatory concerns.
The company's March 2025 demo launch of its AI agent became an overnight sensation, with early access codes reportedly reselling for over $1,000 online. Its rapid growth saw its revenue run rate surge to $125 million by December 2025, up from $90 million in August.
Navigating the US-China Tech Divide
The deal's announcement on Monday turned assumptions about the East-West tech divide upside down. According to a Meta spokesman, there will be no continuing Chinese ownership interests in Manus post-transaction, and the startup will discontinue its services in China.
Reactions from the capitals of the world's two tech superpowers were telling. In Beijing, some officials reportedly viewed the sale with dismay, seeing it as a loss of Chinese AI talent and technology to the U.S. Conversely, in Washington Chris McGuire, a former Biden administration official, noted the deal shows export and investment restrictions are working, potentially pushing other Chinese AI companies toward similar partnerships. This is a departure from earlier in 2025 when a $75 million funding round for Manus led by U.S. firm Benchmark drew scrutiny from Trump administration officials. The acquisition represents a swift and lucrative exit for early investors like Benchmark and HSG (formerly Sequoia China). For Meta, the deal brings exceptional talent to enhance its AI ambitions, with plans to integrate Manus's technology into products like Meta AI, WhatsApp, and Instagram. Professor Winston Ma of NYU School of Law sees this as a potential new path. "It creates a new path for the young AI startups in China," he said, while acknowledging the lingering question of whether Washington will view such deals as a legitimate workaround. The deal underscores a difficult reality for AI startups: scaling globally is immensely costly. For Manus, partnering with a platform giant like Meta provides not just capital but crucial distribution channels and infrastructure. The agreement, negotiated in mid-December at the behest of CEO Mark Zuckerberg to close by year-end, may well herald a new era of complex, cross-border alliances in the relentless race for AI supremacy.A New Blueprint for AI Startups?
