Yes, this holiday season, you can buy toys for your tots that record their voices and upload the recordings to Nuance (the nice folks who bring you Dragon Naturally Speaking). The terms of service basically allow them to do anything they want with the data they collect — presumably including selling it to the pedophile ring in the back room of Comet Ping Pong in Washington, D.C.
Fortunately, there are laws against this kind of thing. Specifically the Children’s Online Privacy Protection Act of 1998. And several organizations such as the Consumers Union have filed a Complaint and Request for Investigation, Injunction, and Other Relief with the FTC.
As for the “defense contractor” thing, Nuance does have some government contracts but mainly it was RawStory’s clickbait headline. Hey, it worked on me.