Right, so totally cool to ignore the law but our TOS is a binding contract.

Yes, they can be sued for breach of contract. And it’s not a regular ToS but a signed MSA and other legally binding documents.

the license on my open source code is a contract, and they ignored that

if they can get away with it (say by claiming it's "fair use"), they'll ignore corporate ones too

If I were to go out on a limb, those companies spend more on tech companies than you and they have larger legal teams than you. That is a carrot and a stick for AI companies to follow the contract.

no, it's not an incentive to follow the contract

it's an incentive to pretend as if you're following the contract, which is not the same thing

Where are they ignoring the law?

Thats an allegation. Doesnt an allegation need to be tested?

people that say this tend to have a misinterpretation of copyright, and use all the court cases brought by large rights holders as validation

despite all 3 branches of the government disagreeing with them over and over again