In December 2025, Meta completed a significant multibillion-dollar acquisition of Butterfly Effect, the Chinese startup behind the AI agent Manus. This decisive move signals a crucial shift in the AI landscape, transitioning from competition over model size to real-world applications. Manus operates as a sophisticated agent, capable of executing complex tasks, making it a valuable asset for Meta. The acquisition reflects a deeper issue: the structural undervaluation of AI application innovation in China’s tech ecosystem, which has traditionally favored foundational models. While some Chinese investors view this as a loss, it highlights the potential for world-class AI application teams in China and raises questions about strategic autonomy. Meta’s investment underscores the importance of controlling AI deployment to shape future demand for computing resources. As the AI agent sector evolves, companies face a choice: be acquired or carve out niche domains. This acquisition marks the beginning of the AI agent era, with consolidation likely to accelerate.
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