Amid a flood of toys boasting AI features this holiday season, a consumer advocacy group warns that more must be done to ensure the gadgets are safe for children.
Public Interest Research Group, which pushes for corporations and government bodies to prioritise health, safety and well-being, said in a new report that many of the new AI-enabled toys being advertised come with risks.
One of four AI toys examined by Pirg, an AI-powered plush bear named Kumma, had very few guardrails, and, according to the consumer advocacy group, “gave detailed instructions on how to light a match”, and in some instances “discussed a range of sexually explicit topics in depth in conversations lasting more than 10 minutes”.
Pirg said the company behind the toy, FoloToy, later made changes to the device after an internal safety audit, but bigger concerns linger for the toy industry and its adoption of AI as a whole.
Other companies mentioned in the report, such as the AI-toy robot maker Miko, included disclaimers with its device that warned that the company “may share some data with third-party game developers and advertising partners”.
Based on testing various products, Pirg said that there was room for considerable improvement when it comes to making AI toys safer and easier for parents to control.
“Regulators should enforce existing consumer protection and privacy laws that do already apply to AI products,” the report's conclusion read in part, also going as far as pushing to limit how toys with AI features are advertised. “AI toys should be neither designed nor marketed as emotional companions for children,” Pirg's analysis said.
If neither regulators or companies act upon the group's recommendations, the report said that ultimately the slack needs to be picked up elsewhere, starting with those who make the toy purchases. “Parents should think carefully before bringing these toys home,” Pirg concluded.
Such concerns echo a larger dialogue about AI. Recent polls, particularly among those conducted in the US, show increasing worries about the technology. Though the anxiety is largely driven by fears of labour disruption, there is also concern about data privacy, copyright infringement and the unknowns surrounding chatbots.
In that context, it's no surprise that the toy company Mattel has cooled on its partnership with the technology giant OpenAI, which helped to take AI mainstream with the introduction of its ChatGPT platform in late 2022.
Mattel originally said it would team up with OpenAI to “bring the magic of AI to age-appropriate play experiences with an emphasis on innovation, privacy, and safety”. However, a few weeks later, after an outcry from child safety advocates and interest groups, the company said it would delay those plans.
“Given the threat that AI poses to children’s development, not to mention their safety and privacy, such caution is more than warranted,” said Rachel Franz, director of the children's safety and advocacy group Fairplay.
“We urge Mattel to make this delay permanent,” she added. She said toys with AI and AI chatbots have the potential to invade family privacy, displace “key learning activities” and disrupt children's relationships.
“Mattel has an opportunity to be a real leader here – not in the race to the bottom to hook kids on AI – but in putting children’s needs first and scrapping its plans for AI toys altogether,” the Fairplay director said. Still, Pirg noted that AI has potential benefits for children, especially in education.
“Chatbot-enabled technologies could offer kids personalised support in their learning, supplementing the work of teachers and parents, the consumer advocacy group mentioned in its AI toy analysis, which also references research showing how AI chatbots have helped children improve language and literary skills.
The bigger worry remains that in a rush to capture the attention of busy parents who want the best for their children, AI technology is being included in toys, often without proper safeguards. “AI toys ... resemble an experiment on our kids – one with minimal oversight,” Pirg's report said.
The low down
Producers: Uniglobe Entertainment & Vision Films
Director: Namrata Singh Gujral
Cast: Rajkummar Rao, Nargis Fakhri, Bo Derek, Candy Clark
Rating: 2/5
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
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