Meta just acquired an AI startup founded in China for $2 billion. Here’s why it’s important

A darling of the artificial intelligence startup scene has just been acquired by Meta, capping a year of intense competition between American tech giants vying for dominance of the world’s most coveted technology.

Manus, based in Singapore, Founded in China specializing in agentic AI for small and medium-sized businesses, announced Monday that it will join Mark Zuckerberg’s Meta, the parent company of Facebook, Instagram and WhatsApp.

Distinct from AI chatbots like ChatGPT and Deep searchboth of which require user prompts to complete tasks, Manus claims its product can make decisions and complete tasks on its own, with far fewer prompts than its competitors.

And – unlike much of the sector, which is highly valued for its future potential but not yet largely profitable – she actually makes money, which she earns by selling her product through subscriptions.

The goal of the acquisition is to give Meta’s existing platforms “a sort of brain transplant,” said Carmi Levy, a technology analyst based in London, Ontario.

Manus’ technology could improve Meta’s agent capabilities — like answering questions or completing tasks — by keeping users on its platforms longer so that Meta, as Levy puts it, “can make more money from them.”

The company would be sold for US$2 billion, a relatively inexpensive purchase in proportion to the dividends it could pay to its new owner, who has embarked on an AI buying spree this year as it competes with major players like OpenAI and Google.

Why Meta made the move

Now widely considered a traditional technology company, California-based Meta is “working to pivot and rebuild its business for this new era of AI,” Levy said.

“Developing a lot of this technology in-house has proven difficult because that’s not what their culture was built on,” he explained. Instead, the tech giant is buying up smaller companies and integrating emerging technologies into its core businesses “as quickly as possible.”

Last June, Meta bought data company Scale AI for more than US$14 billion and tapped its CEO to help launch a “superintelligence” unit that will focus on the company’s internal AI models, including Llama, its large open-source language model.

Meta has poured money into superintelligence and advertising technology for marketers, and is now trying to force consumers to use artificial intelligence through its most popular platforms, said Gil Luria, a stock analyst at US investment bank DA Davidson, told CNBC this week.

“One of the things they saw in Manus was that he was incorporated into [Chinese messaging app] WeChat, which is really a model for what they want to do with WhatsApp. It’s this tool that lets you do everything: it’s PayPal, it’s chat, it’s payments, it’s everything,” Luria said.

“So by taking Manus and putting him there, Mark Zuckerberg is going to give us the companion that he dreams of – this friend-assistant-friend who helps us do things,” he said. This could make the app more monetization-friendly than it currently is, according to Luria.

The Facebook co-founder wants Meta to compete in consumer-facing AI technology, “where it’s fighting not only OpenAI with ChatGPT, but also Google with its distribution through search, through YouTube, through all of its other properties,” Luria said.

Chinese roots could upset US regulators

The deal will first need approval from U.S. regulators, who are closely scrutinizing Chinese companies over alleged national security concerns.

The most famous precedent is the conflict between the US government and Beijing-based social media app TikTok, a years-long saga that recently ended with parent company ByteDance. sell its activities in the United States to a group of American investors.

As with TikTok, the Meta-Manus deal “will likely give pause to those who are concerned about the Chinese government’s access to data collected by these apps, by these platforms, and what is done with that information,” Levy said.

Some of that tension came to the fore when another U.S. company invested in Manus — owned by Beijing-based company Butterfly Effect — earlier this year. Venture capital firm Benchmark led a US$75 million fundraising round in Manus last April and was criticized by some in the US government for the action.

“Who thinks it’s a good idea for American investors to subsidize our biggest AI adversary, and then have the [Chinese Communist Party] use this technology to challenge us economically and militarily? Not me,” wrote Republican Senator John Cornyn, a member of the Senate Select Committee on Intelligence.

If the U.S. government thought TikTok was an aggressive data collector, it “hasn’t seen anything yet,” with Manus having infinitely more capabilities to harvest enormous amounts of information, Levy said.

“Concerns about data integrity and privacy and, of course, geopolitical concerns will be at the forefront throughout the regulatory process, and it is not a given that the United States will greenlight this deal.”