New digital child report highlights growing risks and opportunities as AI becomes part of childhood

A new report from the ARC Centre of Excellence for the Digital Child is calling for stronger safeguards, clearer regulation and greater public awareness as generative artificial intelligence (AI) becomes increasingly embedded in children's everyday lives.

The report, Generative AI in Children's Lives: Issues in the Use of AI Toys, Companions, Chatbots and Devices, examines the growing presence of AI-powered toys, digital companions, chatbots and smart home devices designed for children, and explores the implications for children's development, privacy, wellbeing and safety.

As AI technologies become more sophisticated and accessible, the researchers argue that governments, regulators, educators and families must consider not only the opportunities these tools present, but also the risks that emerge when commercial AI systems become part of childhood.

AI is becoming part of children's everyday experiences

The report highlights a significant shift in the role of children's technologies.

Unlike traditional toys, many AI-enabled products are capable of collecting information, adapting to children's behaviours and generating personalised responses in real time. These systems can engage in conversations, remember preferences, respond emotionally and influence how children interact with both technology and the people around them.

Researchers note that AI-powered devices are increasingly shaping children's play, learning and daily routines, often in ways that are not immediately visible to parents and caregivers.

The report argues that these technologies should be understood not simply as toys or entertainment products, but as complex digital systems that can influence children's development and experiences.

Key concerns identified

While acknowledging the potential benefits of AI technologies, the report identifies several areas requiring closer attention.

Children's data and privacy

Many AI-powered products rely on the continuous collection and analysis of data, including speech, behaviours, preferences and interactions.

The report raises concerns about the extent of data collection occurring through children's products and questions whether existing privacy protections adequately address the long-term implications of children's digital footprints.

Emotional attachment and AI companionship

Researchers also examine the growing popularity of AI companions designed to simulate friendship, empathy and emotional responsiveness.

The report suggests these technologies may blur the boundaries between human relationships and machine interactions, raising questions about how children understand trust, connection and social engagement.

Particular attention is given to the possibility of children forming emotional attachments to products that are ultimately commercial technologies designed and controlled by companies.

Safety and content risks

Like many generative AI systems, AI toys and chatbots can produce inaccurate, misleading or inappropriate responses.

The report notes concerns about misinformation, biased outputs, unsafe advice and content that may not be suitable for children's developmental stages.

Regulatory and governance challenges

According to the researchers, Australia's existing regulatory frameworks were largely developed before the emergence of generative AI technologies.

As a result, areas such as AI-driven personalisation, emotional simulation, continuous data collection and international data sharing may not be fully addressed by current laws and policies.

Equity and access

The report also highlights concerns that the rapid growth of AI technologies could contribute to new forms of digital inequality.

While some families may access high-quality, well-designed AI tools that support learning and development, others may encounter lower-quality products with fewer safeguards or protections.

Potential Benefits for Learning and Inclusion

Despite the concerns, the report does not position AI as inherently harmful.

Instead, the authors acknowledge that AI technologies may offer meaningful opportunities when designed and used appropriately.

Potential benefits identified include:

• Supporting language and communication development
• Encouraging creativity and exploration
• Providing personalised learning experiences
• Improving accessibility for children with disability
• Supporting culturally responsive and adaptive content

However, the report emphasises that these benefits depend on strong governance, transparency and child-centred design principles.

What this means for early childhood education

For the early childhood education and care sector, the report raises important questions about how educators can support children growing up in an increasingly AI-enabled world.

The researchers suggest that AI literacy may become an increasingly important component of children's digital literacy, alongside existing conversations about technology use, online safety and critical thinking.

The report also highlights the need for safeguarding frameworks to evolve as children begin interacting not only with digital platforms, but with AI systems capable of generating responses, influencing behaviour and collecting data.

As AI-powered products become more common in homes and learning environments, educators, service leaders and policymakers may need to consider how these technologies align with children's rights, wellbeing and developmental needs.

A call for national leadership

The report concludes with a call for coordinated national action to ensure children's interests remain central to the development and regulation of AI technologies.

Recommendations include:

• National standards for AI products used by children
• Stronger requirements for data collection, storage and deletion
• Greater transparency around how AI systems operate
• Child-centred design requirements
• Public education for families and educators
• Independent oversight and accountability mechanisms

The authors argue that the decisions made today will shape how future generations experience artificial intelligence throughout childhood.

For educators, families and policymakers alike, the report serves as a timely reminder that AI is no longer a future issue. It is already part of many children's lives, making it increasingly important that the technologies they encounter are designed, governed and regulated with children's rights, safety and wellbeing at the centre.

Read the full report here.