Earlier quoted context omitted.
I think that the answer they want to say is, “it probably does”, but they don’t want to say it and cause a big disruption to commerce until the courts intervene.
There is precedent in Authors' Guild vs Google and Perfect 10 vs Google that it doesn't, this isn't the first time things like this have come before the courts. There are also laws to consider. I know this is US law and the US doesn't have those laws, but copyright harmonisation is a thing and the EU, UK, Japan etc all have laws very explicitly stating that TDM is an exemption to copyright - some bodies would presuma…
A Deeper Look into the EU Text and Data Mining Exceptions: Harmonisation, Data Ownership, and the Future of Technology, Journal of European and International IP Law, 2022
https://academic.oup.com/grurint/article/71/8/685/6650009
"This paper focuses on the two exceptions for text and data mining (TDM) introduced in the Directive on Copyright in the Digital Single Market (CDSM).
While both are mandatory for Member States, Art. 3 is also imperative and finds application in cases of text and data mining for the purpose of scientific research by research and cultural institutions; Art. 4, on the other hand, permits text and data mining by anyone but with rightholders able to ‘contract-out’ (Art. 4).
We trace the context of using the lever of copyright law to enable emerging technologies such as AI and the support innovation. Within the EU copyright intervention, elements that may underpin a transparent legal framework for AI are identified, such as the possibility of retention of permanent copies for further verification.
On the other hand, we identify several pitfalls, including an excessively broad definition of TDM which makes the entire field of data-driven AI development dependent on an exception. We analyse the implications of limiting the scope of the exceptions to the right of reproduction; we argue that the limitation of Art. 3 to certain beneficiaries remains problematic; and that the requirement of lawful access is difficult to operationalize.
In conclusion, we argue that there should be no need for a TDM exception for the act of extracting informational value from protected works. The EU’s CDSM provisions paradoxically may favour the development of biased AI systems due to price and accessibility conditions for training data that offer the wrong incentives. To avoid licensing, it may be economically attractive for EU-based developers to train their algorithms on older, less accurate, biased data, or import AI models already trained abroad on unverifiable data." [reformatted]