LLMs are OBVIOUSLY not a replacement for the books and works that they're trained on, just like Google books isn't.
1. For example earlier this month: https://www.reddit.com/r/fantasyromance/comments/1ktrwxj/fan...
That is, if you want to read Harry Potter, you'd rather buy it (or get it from Anne) than try to wrangle it out of an LLM. Therefore, it doesn't compete with the original work. IANAL, though.
1. the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes;
2. the nature of the copyrighted work;
3. the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and
4. the effect of the use upon the potential market for or value of the copyrighted work.
"Transformative" is also part of 1 and is often cited as letting LLMs get away with everything, but everybody argues that and doesn't always win. Also, it's quite linked with 4.
2 mostly isn't a problem but gets into nasty details.
For 3 (emphasis on "used"), this link once again proves that the point does fail.
For 4 we are indisputably seeing mass disruption in several fields, so that point fails.
To be clear - there are ways to use LLMs that balance much closer to the side of fair use, but that isn't how LLMs are advertised.
We have not seen mass disruption in books or news for example, which seem to be two big areas that are most aggressively pursuing copyright claims.
I think the best case on this front is probably from Getty where image generation models ARE directly competing with them.
LLMs are advertised for, and attempt to, replace the works that they're trained on. For HN users, this is most often for code-generation, but people in other fields use it for similar replacement in their own field.