Now, the United States and China are engaged in an all-out war to build the most powerful AI on the planet. The Chinese government is spending billions on domestic models, tightening its grip on high-tech sectors and nervously watching AI talent gravitate toward American companies. A Carnegie Endowment study released late last year found that 87 of the top 100 Chinese AI researchers at U.S. research institutions in 2019 are still employed.
But Manas, one of China’s hottest AI startups, quietly relocated to Singapore and sold itself to Meta for $2 billion. Did anyone think there wouldn’t be a cleanup on this partnership?
As industry insiders know, Manus emerged last spring with a demo video of an AI agent screening job candidates, planning vacations, and analyzing stock portfolios, cheekily claiming it outperformed OpenAI’s Deep Research. Within weeks, Benchmark (a premier Silicon Valley venture firm) led a $75 million funding round at a $500 million valuation. That was a surprise. (Senator John Cornyn also weighed in, tweeting at the time: “Who thinks it’s a good idea for American investors to subsidize our greatest enemy in AI, and for the Chinese Communist Party to use that technology to challenge us economically and militarily? Not me.”)
By December, Manus had millions of users and was generating more than $100 million in annual recurring revenue. Then Meta got a call and Mark Zuckerberg, who bets the company’s future on AI, bought it for $2 billion.
It is worth noting that Manas did not simply market himself to American buyers. It has spent much of the last year actively operating outside of China’s orbit. The company moved its headquarters and core team from Beijing to Singapore, restructured its ownership, and after the deal with Meta was announced, Meta pledged to sever all ties with Manas’ Chinese investors and completely close down its operations in China. By all accounts, Manas was trying to make itself a Singaporean company.
But if this turn of events raised eyebrows in Washington, one can only imagine it was a stroke in Beijing.
In China, there are words for all of these things. “Selling the young crop” means that homegrown AI companies move abroad before they are fully mature, bringing in intellectual property and talent to market themselves to foreign buyers.
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The Chinese government hates that and has spent years establishing that no company operates outside of the Chinese government’s purview. Indeed, we all remember when Jack Ma gave a speech in 2020 that was mildly critical of Chinese regulators. He then disappeared from public view for months, Ant Group’s blockbuster IPO was canceled overnight, and Alibaba was fined $2.8 billion. China then spent the next two years systematically dismantling its booming technology sector, wiping out hundreds of billions of dollars in market value. China’s leadership has many characteristics, but sensitivity is not one of them.
That’s why it came as no surprise when the Financial Times reported on Tuesday that Manas co-founders Xiao Hong and Ji Yiqiao had been called to a meeting with China’s National Development and Reform Commission this month and announced that they would not be leaving the country for some time. No formal charges have been filed, only an investigation into whether the meth deal violates the Chinese government’s foreign investment rules.
The Chinese government calls this a periodic regulatory review.
At some point, someone at Manus probably thought they’d gotten away with this, and probably still do. But given the stakes of the AI race, it was always a big gamble. Now, the Chinese government wants answers. Manas’ founders clearly aren’t going anywhere until they get it.
