How is there no financial damage? If models start replacing existing business cases but are only able to do so because they were trained on copyrighted data relating to those business cases, then the financial damage should be very obvious.
If I make a better search engine than Google and take away their ads business, I have damaged them, but I am not liable.
The argument here is that Facebook does not actually own LLaMA, because they don't own the training data, they didn't have humans curate the training data in a creative way, and the actual training process is purely mechanical. If LLaMA is not copyrightable then you cannot be liable for copying it.
> But financial damage on programs distributed for free is…nothing.
Not necessarily.
For instance, if the program is distributed free for a limited set of purposes under a license, but available for a negotiated license (with payment) for other purposes, then the reasonable market value of a license without the restriction would be actual damages.
2) the value of machine learning training on any one particular piece of source code also approaches zero
If a model replaces a business case for software you were giving away for free, how are you financially harmed? Even if you won a lawsuit you can't demonstrate any financial impact of software you give away for free.
Open source software is famously not costless (gratis) software, so the premise of the argument is false. I may for instance benefit from people using my software and then obtaining paid support from me, or using paid add-ons (the "open core" model).