There is already a class action lawsuit. The companies that move forward with "dirty" models can be wiped out by legal fees before they got off the ground.
This will likely just entrench the companies with pockets deep enough to satisfy the lawyers in the class action suits. It might burn down a startup. On the other hand, if Microsoft thinks it's a potential $500 billion business, a $1 billion settlement is just table stakes.
That likely wouldn't be on the table in a settlement offer, and it might be a tough sell for the plaintiff class to get nothing or a protracted legal battle instead of an easy and significant payout. Anything is possible, but I don't think a lawsuit's likely outcome in this situation would be a scorched earth fight.
Has this ever happen in practice for well funded company outside Napster case? I am skeptical that training on publicly accessible data can be ruled illegal. Too many side effects including making Google Search problematic.