The holiday season has become a testing ground for a $16.7 billion global industry: AI-powered smart toys. What was once a world of innocent plush animals and building blocks is now populated by chatty companions that can interact with kids — and sometimes, disturbingly, with no boundaries.
The controversy exploded when FoloToy’s AI teddy bear, Kumma, began discussing sexually explicit topics. According to a report by the Public Interest Research Group (PIRG), the bear suggested bondage and roleplay when prompted — an alarming demonstration of what unregulated AI can do when marketed to children.
Consumer advocates warn that the stakes are more than just awkward conversations. Children could form attachments to bots instead of real people or imaginary friends, potentially disrupting social and emotional development. Jacqueline Woolley, director of the Children’s Research Center at the University of Texas, notes that, unlike traditional toys that follow scripted responses, AI companions can offer “free-flowing” dialogue that’s often sycophantic, reducing opportunities for learning conflict resolution and healthy interaction.
Surveillance is another concern. Smart toys with microphones — and sometimes cameras — collect data from kids in ways that aren’t always transparent. Rachel Franz, director of Young Children Thrive Offline, emphasizes that these products create unnecessary and potentially risky channels for sensitive information.
Despite these red flags, the industry is booming. From China’s 1,500 AI toy companies to U.S. giants like Mattel partnering with OpenAI, AI-powered play is rapidly expanding. But as watchdog groups sound the alarm, the question remains: should we trade safe childhood interaction for artificial companionship, or are we creating a generation for whom digital friends may replace human ones?
Until regulators catch up, experts suggest leaving AI out of playrooms and sticking to toys that don’t listen, record, or lecture — the kind that don’t have a mind of their own.
