Speaking at the Fortune Brainstorm AI conference this week with editorial director Andrew Nusca, Gordon-Levitt used “The Artist and the Algorithm” session to pose another, deeper question: “Why should the companies building this technology not have to follow any laws? It doesn’t make any sense.”

In a broad-ranging conversation covering specific failures in self-regulation, including instances in which “AI companions” on major platforms reportedly verged into inappropriate territory for children, Gordon-Levitt argued relying on internal company policies rather than external law is insufficient, noting such features were approved by corporate ethicists.

Gordon-Levitt’s criticisms were aimed, in part, at Meta, following the actor’s appearance in a New York Times Opinion video series airing similar claims. Meta spokesperson Andy Stone pushed back hard on X.com at the time, noting Gordon-Levitt’s wife was formerly on the board of Meta rival OpenAI.

Gordon-Levitt argued without government “guardrails,” ethical dilemmas become competitive disadvantages. He explained that if a company attempts to “prioritize the public good” and take the “high road,” it risks being “beat by a competitor who’s taking the low road.” Consequently, he said he believes business incentives alone will inevitably drive companies toward “dark outcomes” unless there is an interplay between the private sector and public law.

‘Synthetic intimacy’ and children

Beyond the lack of regulation, Gordon-Levitt expressed deep concern regarding the psychological impact of AI on children. He compared the algorithms used in AI toys to “slot machines,” saying they use psychological techniques designed to be addictive.

Drawing on conversations with NYU psychologist Jonathan Haidt, Gordon-Levitt warned against “synthetic intimacy.” He argued that while human interaction helps develop neural pathways in young brains, AI chatbots provide a “fake” interaction designed to serve ads rather than foster development.

“To me it’s pretty obvious that you’re going down a very bad path if you’re subjecting them to this synthetic intimacy that these companies are selling,” he said.

Haidt, whose New York Times bestseller The Anxious Generation came recommended from Gordon-Levitt onstage, recently appeared at a Dartmouth–United Nations Development Program symposium on mental health among young people and used the metaphor of tree roots for neurons. Explaining tree-root growth is structured by environments, he brought up a picture of a tree growing around a Civil War–era tombstone. With Gen Z and technology, specifically the smartphone, he said: “Their brains have been growing around their phones very much in the way that this tree grew around this tombstone.” He also discussed the physical manifestations of this adaptation, with children “growing hunched around their phone,” as screen addiction is literally “warping eyeballs,” leading to a global rise in myopia shortsightedness.

The ‘arms race’ narrative

When addressing why regulations have been slow to materialize, Gordon-Levitt pointed to a powerful narrative employed by tech companies: the geopolitical race against China. He described this framing as “storytelling” and “hand-waving” designed to bypass safety checks. Companies often compare the development of AI to the Manhattan Project, arguing slowing down for safety means losing a war for dominance. In fact, the Trump administration’s “Genesis Mission” to encourage AI innovation was unveiled with similar fanfare just weeks ago in late November.

However, this stance met with pushback from the audience. Stephen Messer of Collective[i] argued Gordon-Levitt’s arguments were falling apart quickly in a “room full of AI people.” Privacy previously decimated the U.S. facial recognition industry, he said as an example, allowing China to take a dominant lead within just six months. Gordon-Levitt acknowledged the complexity, admitting “anti-regulation arguments often cherry-pick” bad laws to argue against all laws. He maintained that while the U.S. shouldn’t cede ground, “we have to find a good middle ground” rather than having no rules at all.

Gordon-Levitt also criticized the economic model of generative AI, accusing companies of building models on “stolen content and data” while claiming “fair use” to avoid paying creators. He warned a system in which “100% of the economic upside” goes to tech companies and “0%” goes to the humans who created the training data is unsustainable.

Despite his criticisms, Gordon-Levitt clarified he is not a tech pessimist. He said he would absolutely use AI tools if they were “set up ethically” and creators were compensated. However, he concluded that without establishing the principle that a person’s digital work belongs to them, the industry is heading down a “pretty dystopian road.”