When have we ever put the scope of the impact as part of the judgement of the legality of disruptive businesses? When did the impact of WalMart on small businesses matter legally, or Amazon on independent bookstores, or iTunes music store on independent music stores, or Netflix on video rental stores? Or NAFTA on American factory workers?
Sorry, I don't buy the argument that the scale of the impact transformative impacts the question of legality; it never has before.
If you are talking about the social problem of skilled people willing to work who cannot find meaningful employment: well, let's address that directly, but not by banning generative AI.