AI Kids’ Toys Enter a Legal and Ethical Wild West

The green, frog-shaped tablet antagonist in Toy Story 5 may be a clever villain, but Pixar could have drawn even more timely inspiration from reality. AI-powered children’s toys are flooding the market, marketed as friendly companions for kids as young as three, and they operate in a largely unregulated space. Thanks to accessible model developer programs and the rise of vibe coding, creating an AI companion has never been simpler. By 2026, these toys have become a dominant trend among cheap trinkets, prominently featured at major trade shows like CES, MWC, and Hong Kong’s Toys & Games Fair. As of October 2025, over 1,500 AI toy companies were registered in China alone, and Huawei’s Smart HanHan plush toy sold 10,000 units in its first week. Sharp also launched its PokeTomo talking AI toy in Japan this April.

Scrolling through Amazon, you will mostly encounter specialized brands such as FoloToy, Alilo, Miriat, and Miko. Miko claims to have sold more than 700,000 units. Consumer advocacy groups, however, are raising alarms. They argue that these soft teddy bears, bunnies, sunflowers, and kid-friendly robots need far more guardrails and stricter regulations. When the Public Interest Research Group’s New Economy team tested FoloToy’s Kumma bear, which runs on OpenAI’s GPT-4o, it gave instructions on lighting a match and finding a knife, and even discussed sex and drugs. Alilo’s Smart AI bunny talked about leather floggers and “impact play,” while NBC News tests revealed that Miriat’s Miiloo toy recited Chinese Communist Party talking points.

Age-inappropriate content is only the most visible issue. Researchers are beginning to study the deeper social impacts these toys may have on children. R. J. Cross, director of PIRG’s Our Online Life program, notes that problems with faulty guardrails are fixable. “Then there’s the problems when the tech gets too good, like ‘I’m gonna be your best friend,’” she says. This is exemplified by Curio’s Gabbo toy. Even though companies market these products as superior, “screen-free play,” there are real social developmental concerns.

A University of Cambridge study published in March was the first to observe children playing with a commercially available AI toy in a controlled setting. Jenny Gibson, a professor of Neurodiversity and Developmental Psychology, and research associate Emily Goodacre worked with 14 children aged 3 to 5 in the spring of 2025, using the Curio Gabbo. The toy did not discuss drugs or say “I love you,” but the researchers identified significant developmental psychology concerns. They produced recommendations for parents, policymakers, toy makers, and early years practitioners.

One key issue was conversational turn-taking. Goodacre explains that children up to age 5 are still developing spoken language and relationship-building skills, and even babies engage in conversational turn-taking. The Gabbo’s turn-taking is “not human” and “not intuitive,” she says. Some children in the study were unfazed and continued playing. Others faced interruptions because the toy’s microphone could not listen while speaking, breaking the natural back-and-forth flow of a counting game or similar interaction.