If an employee at a photo lab was keeping and sharing copies of compromising pictures there would be huge outrage and rightfully so. Just because they have to handle personal data doesn't mean it's acceptable to share and laugh with your colleagues; it should be handled with the utmost respect for your users' privacy.
I think that the law is woefully unequipped to handle this situation, but there is definitely an ethical concern over training your models on copyrighted work. Adobe isn't going to scrape images off of social media to train their image generator and that will always put them behind companies that do. I can't say whether that's fair but I have very little faith that regulators will understand this issue enough to find a solution.