This summer, OpenAI and Mattel $MAT ( ▲ 1.13% ) made headlines with plans to bring AI-powered toys and games to market. Now, those ambitions are on pause.
According to a new report from Axios, the companies have quietly halted work on their AI toy initiative, and the product is no longer expected to launch in 2025. The timing is not random. It comes as scrutiny around AI safety, especially for children, is intensifying fast.
When smart toys get complicated
AI-powered toys sound fun in theory. In practice, they open a can of worms. Recent reporting has highlighted how AI companions can behave unpredictably when guardrails are weak or poorly designed, raising concerns about emotional manipulation, inappropriate responses, and psychological harm.
Those risks are amplified when the users are kids. Unlike adults, children are far more likely to form emotional attachments to interactive characters, which makes safety failures far more consequential.
Pressure on OpenAI is rising
OpenAI is already under the microscope. The company has faced mounting criticism over chatbot safety following several high-profile incidents tied to vulnerable users. Lawmakers are now digging deeper into the psychological risks of AI systems, particularly around mental health and the use of AI companions by minors.
Congress has begun examining whether existing safeguards are sufficient, and whether companies are moving faster than regulators can keep up. Against that backdrop, pushing an AI toy into the hands of children suddenly looks like a high-risk move.
A quiet reset
Neither OpenAI nor Mattel has publicly framed the delay as a cancellation, but the pause signals caution. For Mattel, which has spent decades protecting brands built on trust with parents, the downside risk of getting this wrong likely outweighs the upside of being first to market.
For OpenAI, the episode is another reminder that scaling AI into everyday consumer products, especially those aimed at children, comes with consequences that go far beyond cool demos and headline deals.
For now, the AI toy box stays closed.