Why IP’s AI Debate Is Really About Market Power

concern but a structural one. The 2025 fair use record is revealing not only for its outcomes but also for what it signals about institutional competence. US courts, facing rapid technological change, are structurally inclined to resolve disputes with the tools they already have. Fair use is flexible, fact-sensitive, and historically capable of absorbing new technologies. In contrast, Congress is slow, politically fragmented, and often reactive. The result is a familiar American pattern: courts expand doctrine at the margin, and Congress either ratifies it later, intervenes selectively, or does nothing. This dynamic has two consequences that are easily overlooked. First, doctrinal flexibility can become a substitute for democratic choice. When courts effectively set the baseline that mass training is presumptively lawful, the burden shifts to rightsholders to prove harm and to legislators to reverse a settled expectation. Second, a court-centred approach tends to focus on substitution and copying because they fit the doctrinal factors, and it tends to underweight structural market concentration because that is not the native language of IP litigation. Even when courts recognize potential market shifts, they often treat them as speculative until quantified. However, in generative AI, structural changes can harden long before they are easily measurable. 123 2 Y. Reinfeld, A. Gaon Europe’s architecture differs in its design and political economy. The EU’s 2019 Copyright framework establishes a text-and-data-mining exception that may cover commercial uses of lawfully accessed content unless rightholders have expressly reserved their rights; for content made publicly available online, such reservations should be machine-readable. The AI Act adds a separate layer through transparency duties for providers of GPAI models, including the requirement to publish a public summary of the training content using a Commission template. 1 Directionally, this is the right target. If the bottleneck is upstream, regulate upstream. Yet, the EU’s opt-out mechanism risks becoming a legal fiction if it does not account for the massive asymmetry between individual creators and industrial- scal