When Meta announced its US$2 billion acquisition of AI startup Manus, it was meant to be a victory lap for CEO Mark Zuckerberg. By bringing what it billed as the world's most advanced agentic AI under the Meta umbrella, the social media giant was expected to leapfrog OpenAI and Google. Instead, the deal has become a flashpoint for geopolitical tension. According to The New York Times and Alpha Spread, the acquisition is now entangled in investigations over "Singapore washing" and questions about the origins of its digital infrastructure.
The art of "Singapore washing"
The primary obstacle to closing the deal is no longer the US Federal Trade Commission (FTC), but China's Ministry of Commerce (MOFCOM). As reported by Computerworld and CRN Asia, Chinese regulators this week intensified their probe into whether Manus engaged in "Singapore washing" — a practice where Chinese-founded startups relocate their headquarters to Singapore to obscure their origins ahead of an American exit.
The investigation centers on the 2025 relocation of Manus's core engineering team from Beijing and Wuhan to Singapore. Under China's strict export control catalog, the transfer of advanced AI algorithms requires an explicit government license. Silicon Republic reports that if regulators determine Manus bypassed these requirements, the deal could be unwound and its founders could face criminal charges in China.
Meta's internal turmoil
Even as Meta fights to close the Manus deal, it is simultaneously restructuring internally. The company is reportedly preparing for sweeping layoffs affecting up to 20% of its workforce, or roughly 16,000 employees. Executives have cited the staggering capital expenditure demands of AI — estimated at between US$115 billion and US$135 billion for 2026 — as the primary driver behind the cuts.
The acquisition has taken on added urgency following the recent delay of Meta's next-generation model, code-named "Avocado." Initially slated for a March debut, MLQ AI reported that the model has been pushed to at least May 2026 after internal tests showed it trailing Google's Gemini 3.0. To bridge the gap, Meta also acquired Moltbook, a viral social network where AI agents interact autonomously — a move that signals a broader pivot toward functional agentic ecosystems.
The "Chinese DNA" concern
Pressure is mounting from the West as well. In the US, the AI Overwatch Act (HR6875) is gaining significant momentum. According to the US House Committee on Foreign Affairs, the legislation would give Congress 30 days to review and potentially block the export of advanced AI technology to "countries of concern."
US Senator John Cornyn has previously criticized a US$75 million funding round in Manus led by venture capital firm Benchmark, questioning whether American capital was inadvertently fueling Chinese-developed intellectual property. Should the AI Overwatch Act pass the full House, Meta's integration of Manus's code could face a national security audit on US soil.
Meta's stock remains volatile as the risk of a complete regulatory collapse looms large. If the deal falls through, it would signal the end of an era in which tech startups could play both sides of the Pacific. For now, Manus stands as a US$2 billion reminder that in the modern era, there is no such thing as a neutral algorithm.
Article edited by Jerry Chen
