Meta recently acquired a Chinese-founded AI startup for $2B. Here’s why it matters

A darling of the artificial intelligence startup scene was recently acquired by Meta – ending a year of intense competition between US tech giants vying for dominance of the world’s most coveted technology.

Manus, Singapore Chinese-established The firm, which specializes in agentic AI for small and medium-sized businesses, said on Monday it will join Mark Zuckerberg’s Meta, the parent company of Facebook, Instagram and WhatsApp.

Different from AI chatbots like ChatGPT and the like deeper searchBoth require user prompts to execute tasks, with Manus claiming that its product can make decisions and complete tasks on its own, with far less prompting than its competitors.

And – unlike most of the industry, which is highly valued For its future prospects but not yet widely profitable – It actually makes money, which it earns by selling its products through subscriptions.

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

Manus’s technology could improve Meta’s agentic capabilities — like answering questions or completing tasks — keeping users on its platform longer so Meta can, as Levy said, “make more money off of them.”

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

Why did Meta take this step?

Now largely viewed as a legacy technology company, California-based Meta is “struggling to reposition its businesses for this new AI era,” Levy said.

“Developing a lot of technology in-house has proven difficult because their culture is not built on that,” he said. Instead, tech giants are buying smaller companies and incorporating emerging technology into their core operations “as quickly as possible.”

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

Meta has invested money in superintelligence and advertising technology for merchants, and now it is trying to force consumers to use artificial intelligence through its most popular platforms, said Gil Luria, stock analyst at US investment banking firm DA Davidson. told cnbc This week.

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

“So by taking Manus and putting it there, Mark Zuckerberg is going to give us the companion he’s been dreaming about — this friend-slash-assistant that helps us do things,” he said. According to Luria, this could make the app more monetization-friendly than it currently is.

The Facebook co-founder wants Meta to be competitive in AI technology that is ready for consumers, “where he’s not only fighting OpenAI with ChatGPIT, but also fighting Google with their distribution through search, through YouTube, through all their other properties,” Luria said.

Chinese roots could anger US regulators

The deal would first need to be cleared by US regulators, who are heavily scrutinizing Chinese-owned companies over alleged national security concerns.

The most famous example 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 taking over. is selling its US business For a group of American investors.

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

Some of that tension was on display when earlier this year another American company invested in Manus, owned by Beijing-based company Butterfly Effect. Venture capital firm Benchmark led a $75 million US funding round in Manus 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 subsidize our biggest rival in AI, so that (the Chinese Communist Party) can 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 U.S. government thinks TikTok is an aggressive data hoarder, Levy said, “it hasn’t seen anything yet,” Manus has immense potential to collect massive amounts of information.

“So concerns over data integrity and privacy and, of course, geopolitical concerns – these will be prominent throughout the regulatory process, and it is not certain that the US is going to greenlight this deal.”