> Because fair use allows transformation and the output of their algorithm looks nothing like the input of the copyrighted work?

I feel like you miss the point of a law. You seem to read the law, and say "well, the law says X, new technology Y is compatible with it, so that's legal, everyone is happy". But that is wrong. The law reflects the society we want. Do we want a society that completely kills creative work because Big Tech found a loophole to launder their IP? I guess we all agree that we don't. It is not clear if LLM is that loophole, I agree. But you seriously have to take a step back and think about that. What if it does? Then we may have to redefine the meaning of "fair use".

Maybe this particular software was not a danger for those authors. But they don't know that. And given that most engineers talking about LLMs don't seem to remotely understand how one could be worried about it, I understand that they start speaking up wherever they can't. Because clearly it does not seem like those who build those systems give a damn about copyright holders.

I think the actual issue is nuanced and complicated. I think it's fairly clear the tool in question that was non-generative AI is the kind of thing we want to allow under fair use. Whether we want to allow generative AI is more complex, I'd lean towards requiring a license because of non-deterministic duplication. Fair use is an important part of copyright law and we should be very cautious about eroding it. For example, I like Green Day's transformation of the scream icon and think it was substantially different enough that it should be allowed. The courts agreed under current transformation laws but if we weaken protection against transformation we likely reverse the ruling of cases like that as well.