AI Toys Raise Privacy Concerns as US Officials Call for Action on Data Risks

American officials are raising alarm over a new generation of AI-enabled toys manufactured in China, citing significant data privacy concerns for children across the United States.

The smart toy market is experiencing explosive growth, with projections indicating it will reach $14 billion in China alone by 2030, according to a recent report from the Shenzhen Toy Industry Association and JD.com. Globally, the market is expected to expand to $25 billion within the same timeframe.

Representative Raja Krishnamoorthi, D-Ill., has voiced particular concerns about these products being marketed to both parents and educators throughout America. The House Select Committee on the Chinese Communist Party recently addressed these worries in a formal letter to Education Secretary Linda McMahon, specifically highlighting “data privacy and child safety concerns” related to AI toys produced by companies in the People’s Republic of China.

One product drawing significant scrutiny is BubblePal, an AI-powered device designed to clip onto stuffed animals. The toy operates using DeepSeek’s large language model technology and stores voice recordings and conversation histories in cloud systems. U.S. officials warn that this data could potentially be subject to PRC data-access laws, creating a direct pipeline of American children’s private information to foreign entities.

Since its launch last summer, approximately 200,000 BubblePal units have been sold, targeting children as young as three years old. This rapid market penetration has intensified concerns about data collection practices targeting vulnerable populations.

“Given the security risks and privacy concerns associated with these products, I urge you to initiate a campaign aimed at raising public awareness among American educators across the country on the potential misuse of the data collected with these devices,” wrote Krishnamoorthi in the committee’s letter.

The growing market for AI-enabled toys reflects broader trends in the tech industry, where artificial intelligence is being integrated into everyday products at an unprecedented rate. While these toys offer innovative play experiences and potential educational benefits, they also introduce complex privacy challenges that existing regulations may not adequately address.

The committee’s recommendations to Secretary McMahon include launching a nationwide awareness campaign for educators, enhancing federal oversight through inter-agency coordination, and providing clear guidance to parents about how their children’s data could be collected, used, or potentially misused.

This situation highlights the evolving nature of privacy concerns in an increasingly connected world. Traditional toys posed few data security risks, but modern AI-enabled devices often function as sophisticated data collection tools. Children, who cannot meaningfully consent to data collection or understand privacy implications, represent a particularly vulnerable population.

The concerns also reflect broader geopolitical tensions between the United States and China regarding technology, data security, and national security. In recent years, U.S. officials have scrutinized various Chinese technology products and services, from social media platforms to telecommunications equipment, citing similar concerns about data access and potential surveillance.

Industry analysts note that this issue underscores the challenge of balancing technological innovation with appropriate safeguards, particularly for products marketed to children. The toy industry has historically faced stringent safety regulations regarding physical hazards, but data security and privacy represent relatively new regulatory frontiers.

As AI toys continue gaining popularity, parents, educators, and policymakers face difficult questions about the tradeoffs between innovative play experiences and potential privacy risks. Without clear guidelines and transparent data practices, families may struggle to make informed decisions about which products to trust.

U.S. officials emphasize that addressing these emerging issues proactively is essential to ensure American children can benefit from technological advances without compromising their privacy or security in an increasingly complex digital landscape.