How is that bad? Why is there this strong wish for a single corporation to own our culture and what we are without allowance to experiment, build upon it and allow market competition for the best evolution?
Edit: and even today. Generate textures for blocky assets? Sure. But full pokémon models that wouldn't need a ton of rework? Nope.
Well, that is the core benefit of using AI - you can save a lot of the groundwork, especially in concept art. Making 20, 30 versions of "fat rat in yellow with lightning bolt symbols in their fur" is cheap with AI, but prohibitively expensive if you're using humans. You're starting running already.
But Palword feels such a rip off of Zelda BOTW (the intro and the items are 1:1 the same of Zelda, even the tablet!) and Pokemon.
For most if not all "pals" I could instantly name their Pokemon counterpart, that is textbook copyright infringement done in the weakest form.
That's not surprising, because for ever Pokemon it's also fairly easy to name their real-world counterpart. There's a finite amount of recognizable real world animals, so you quickly get there even if you've never seen a Pokemon before.
That’s not copyright infringement: you copyright the form, not the plot.