The thing is: you aren't distributing copies with generative AI, in any sensible meaning of the word.

Don't get me wrong: I think this is in incredibly bad deal for authors. That said, I would be horrified if it wasn't treated as fair use. It would be incredibly destructive to society since people would try to use such rulings to chissel away at fair use. Imagine schools who had to pay yearly fees to use books. We know they would do that, they already try to do so (single use workbooks, online value added services). Or look at software. It is already going to be problematic for people who use LLMs. It is already problematic due to patents. Now imagine what would happen if reformulating algorithms that you read in a book was not considered as fair use. Or look at books themselves. A huge chunk of non-fiction consists of doing research and re-expressing ideas in non-original terms. Is that fair use? The main difference between that and a generative AI is we can say a machine did it in the case of generative AI, but is that enough to protect fair use in the conventional sense?

This is parallel to mass surveillance. Surveillance is OK (private eye) so dragnetting is also OK as it is just scaled up private detectives. If 1 is OK then 1+1 is OK. And so is by peano, a Googolplex of the OK thing.

Imagine schools who had to pay yearly fees to use books

I feel like we aren't far from that. Wouldn't be surprised if new books get published (in whatever medium) that are licensed out instead of sold.