Meta’s $2 billion acquisition of the AI assistant platform Manus has unexpectedly sparked a complex regulatory tug-of-war—not from the U.S., as initially expected, but from China. While American authorities now appear largely satisfied with the deal despite prior concerns over Benchmark’s investment in Manus, Beijing is reportedly far less certain, highlighting a new dimension in global tech oversight.

The initial controversy centered on Benchmark’s funding round earlier this year. U.S. Senator John Cornyn publicly criticized the investment, prompting the U.S. Treasury Department to investigate potential violations of rules restricting American capital in Chinese AI ventures. This scrutiny ultimately led Manus to relocate its operations from Beijing to Singapore, a move described by a Chinese academic as a "step-by-step disentanglement from China."

Now, regulatory focus has reversed. Chinese authorities are reportedly examining whether Meta’s acquisition breaches China’s technology export controls. Officials are questioning whether Manus needed an export license to transfer its core team to Singapore—a trend informally dubbed "Singapore washing." This investigation could give Beijing an unprecedented level of influence over the transaction.

Earlier reports, including one by the Wall Street Journal, suggested that China would have "few tools to influence the deal" due to Manus’s relocation. Yet Beijing appears concerned that a smooth acquisition could set a precedent, encouraging Chinese startups to relocate abroad to sidestep domestic oversight, a tactic previously evident during the Trump-era TikTok controversies.

Warnings from within China underscore the stakes. The same academic who discussed Manus’s strategic move on WeChat cautioned that the platform’s founders could face criminal liability if found to have exported restricted technology without proper authorization.

Some U.S. analysts interpret the acquisition as a strategic win for Washington, showcasing the trend of Chinese AI talent moving into the American ecosystem. Experts suggest this demonstrates that "the US AI ecosystem is currently more attractive," reinforcing U.S. influence in global AI development.

While the final impact of these regulatory developments on Meta’s plans to integrate Manus’s AI agent software remains unclear, the $2 billion deal has evolved into a far more intricate geopolitical chess match, emblematic of the high-stakes competition over AI talent and technology between Washington and Beijing.