Most important part of fair use is does it harm the market for the original work. Search helps to brings more eyes to the original work, llms don't.
Perhaps famously, emulators very clearly and objectively impact the market for a game consoles and computers and yet they are also considered fair use under US copyright law.
No one part of the 4 part test is more important than the others. And so far in the US, training and using an LLM has been ruled by the courts to be fair use so long as the materials used in the training were obtained legally.
2. Nature of the work. Imaginative or creative. Unfavorable.
3. Quantity of use. All of it. Unfavorable.
4. Impact on original market. Direct competition. Royalty avoidance. Unfavorable.
Just because the courts have not done their job properly does not mean something illegal is not happening.
* The use is commercial (a number of emulators are paid access, and the emulator case that carved out the biggest fair use space for them was Connectix Virtual Game Station a very explicitly commercial product)
* The nature of the work is imaginative and creative. No one can argue games and game consoles aren't imaginative and creative works.
* Quantity of use. A perfect emulator must replicate 100% of the functionality of the system being emulated, often times including bios functionality.
* Impact on market. Emulators are very clearly in direct competition with the products they emulate. This was one of Sony's big arguments against VGS. But also just look around at the officially licensed mini-retro consoles like the ones put out by Nintento, Sony and Atari. Those retro consoles are very clearly competing with emulators in the retro space and their sales were unquestionably affected by the existence of those emulators. Royalty avoidance is also in play here since no emulator that I know of pays licensing fees to Nintendo or Sony.
So are emulators a violation of copyright? If not, what is the substantial difference here? An emulator can duplicate a copyrighted work exactly, and in fact is explicitly intended to do so (yes, you can claim its about the homebrew scene, and you can look at any tutorial on setting up these systems on youtube to see that's clearly not what people want to do with them). Most of the AI systems are specifically programmed to not output copyrighted works exactly. Imagine a world where emulators had hash codes for all the known retail roms and refused to play them. That's what AI systems try to do.
Just because you have enumerated the 4 points and given 1 word pithy arguments for something illegal happening does not mean that it is. Judge Alsup laid out a pretty clear line of reasoning for why he reached the decision he did, with a number of supporting examples [1]. It's only 32 pages, and a relatively easy read. He's also the same judge that presided over the Oracle v. Google cases that found Google's use of the java APIs to be fair use despite that also meeting all 4 of your descriptions. Given that, you'll forgive me if I find his reasoning a bit more persuasive than your 52 word assertion that something illegal is happening.
[1]: https://fingfx.thomsonreuters.com/gfx/legaldocs/jnvwbgqlzpw/...
Well they are completely different systems functioning in completely different ways and only looking at one of the four factors isn't doing any favors.
Just like OpenAI is rightfully upset if their LLM output is used to train a competitor’s model and might seek to restrict it contractually, publishers too may soon have EULAs just for reading their books.
Surely making copyright even stronger (and even expanding it to cover style as some have argued in response to the Ghibli style stuff) will have no unintended consequences going forward into a future where more and more technology is locked down by major manufacturers with a strong incentive to use and abuse IP law to prevent competition and open alternatives... right?
Also instructive would be the IBM BIOS clone, it is perhaps true that the "IBM Compatibles" killed the market that existed for IBM machines at that moment in time, but it's also true that it opened whole new markets, both to the clone makers and the ancillary businesses, but also arguably IBM themselves.
3d printing and Arduino are probably other examples where "counterfeits" might have shrunk the market for the originals (Prusa is notably reducing how open their designs are, and Arduino themselves are not the healthiest, modulo being owned by Qualcom now), but the market for Aruduino projects and ancillary supplies and certainly the market for 3d printers is massively healthy, and arguably both are healthier than if Arduino or Prusa (or really Reprap) were the single and sole providers of their products.
And I think art has an even stronger bulwark in that a lot of the value of a given "art" comes not from the art itself, but from the artist. It's very possible many famous artist's works were actually made by their apprentices, but until someone proves that, the art will continue to have value as an original work of the artist. But art is also a dime a dozen (or less). The internet is full of free or dirt cheap art and today you can go on fiver or mechanical turk and commission any number of artworks for probably less than your day's wages. But no one is buying tickets to your Fiver concert. No one buys $1k per plate dinners at Deviant Art gallery showings. But they will pay many thousands of dollars for a piece of artwork that might destroy itself because the person who produced that artwork is named Banksy.
And then for inference, wouldn't it depend on what you're actually using it for? If you're doing sentiment analysis, that's very different than if you're creating an unlicensed Harry Potter sequel that you expect to run in theaters and sell tickets. But conversely, just because it can produce a character from Harry Potter doesn't mean that couldn't be fair use either. What if it's being used for criticism or parody or any of the other typical instances of fair use?
The trouble is there's no automated way to make a fair use determination, and it really depends on what the user is doing with it, but the media companies are looking for some hook to go after the AI companies who are providing a general purpose tool instead of the subset of their "can't get blood from a stone" customers who are using that tool for some infringing purpose.