My point is that Napster-to-SD is not a fair comparison. Napster didn't eliminate or replace human artists, while SD certainly did. Therefore, it's not fair to assume the government can regulate themselves out of this one like they did with Napster. Because even though Napster enabled widespread piracy, the human musicians still had leverage in that they were needed to create new music.
So my answer to the question posed by parent comment of "will SD play out the same way that Napster did?" is "no" because there are fundamentally different economics at play.
Obviously, if a good generative model comes out, the music industry will be in a similar boat to the art industry right now. Google was working on it in 2017 (https://magenta.tensorflow.org/performance-rnn) but I don't know if they've made any progress since.
However, if models to freely generate good music become ubiquitous like SD did, then there'd be no incentive to pay for music, and these arguments would become less valid.
In order for these models to end up being solely controlled by a couple of big corporations as in your scenario (ex: Google, OpenAI) they have to either be prohibitively expensive to train or to run.
The former is more likely, although in the case of SD, it wasn't the case. It will be interesting to see if music generation ends up being more complex (in terms of model size) than image generation.
The latter is much less likely because it's difficult to stop people from just using AWS. I doubt that a cluster of BFGPUs couldn't generate enough music for a month in a couple of hours.