Meta recently acquired a China-based AI startup for $2B. Here’s why it’s important

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

Manus, a Singapore-based, Chinese-founded AI agency for small and medium-sized businesses, said on Monday it will join Mark Zuckerberg’s Meta, which is the parent company of Facebook, Instagram and WhatsApp.

Unlike AI chatbots like ChatGPT and Deepseek, both of which require user input to perform tasks, Manus says his product can make decisions and complete tasks on its own, with far less prompting than its competitor.

And – unlike much of the industry, which is highly regarded for its future capabilities but has yet to generate widespread profits – it actually makes money, which it earns by selling its product through subscriptions.

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

Manus’ technology can enhance Meta’s agent capabilities — such as answering questions or completing tasks — to keep users on its platforms longer so that Meta, as Levy puts it, “can make more money from them.”

The company is reportedly set to be sold for US$2 billion, a relatively inexpensive buyout in terms of the equity it will pay for its new owner, who has been on an AI buying spree this year as it competes with big players like OpenAI and Google.

Why is Meta making this move?

Now largely seen as a legacy tech company, California-based Meta is “pursuing a turnaround, rebuilding their businesses in this new AI era,” Levy said.

“Developing that technology in the house has proven to be difficult because it is not what was built in their culture,” he explained. Instead, the tech giant is buying smaller firms and incorporating emerging technologies into their core operations “as quickly as possible.”

Back in June, Meta bought data company Scale AI for more than $14 billion and brought its CEO on board to help launch an “intelligence” unit that will focus on the company’s internal AI models, including Llama, its open source language model.

Meta has invested in superintelligence and ad technology for marketers, and is now trying to force consumers to use artificial intelligence through its popular platforms, Gil Luria, a stock analyst at US investment firm DA Davidson, told CNBC this week.

“One of the things they see in Manus is that it is included in it [Chinese messaging app] WeChat, which is really a model of what they want to do with WhatsApp. It’s this tool that allows you to do everything — it’s PayPal, it’s chat, it’s payments, it’s everything,” said Luria.

“So by taking Manus and putting him there, Mark Zuckerberg is going to give us his dream friend – this friend who helps people get things done,” he said. This could make the app more monetizable than it is now, according to Luria.

The founder of Facebook wants Meta to be competitive in AI technology aimed at consumers, “where it is fighting not only OpenAI with ChatGPT, but also with Google with their distribution through search, with YouTube, with all their other properties,” said Luria.

Chinese roots can include US controls

The deal would first need to be cleared by US regulators, who have been scrutinizing Chinese-owned firms for national security concerns.

The most famous precedent is the conflict between the US government and the Beijing-based social media app, TikTok, which has recently ended with parent company ByteDance selling its US business to a group of American investors.

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

Some of this tension was seen when another American company invested in Manus – a subsidiary of Beijing-based company Butterfly Effect – earlier this year. Capital firm Benchmark raised $75 million in Manus back in April, and was criticized by some in the US government for doing so.

“Who thinks it’s a good idea for American investors to fund our biggest enemy in AI, only [Chinese Communist Party] use that 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 US government thinks TikTok is an aggressive data hoarder, it “hasn’t seen anything yet,” as Manus has an unmatched ability to harvest large amounts of data, Levy said.

“So data integrity concerns and privacy concerns and national concerns — that will be prominent throughout the regulatory process, and it’s not considered that the US will give this deal the green light.”