[everforward]

Correct me if I'm wrong, but my understanding is that the creation of the image is still infringement.

No one is going to sue a child over a drawing on a fridge, though. The PR would be a nightmare, there's no earnings to seize, and it's not cannibalizing the market for the real thing in any way.

Midjourney has issues on a couple of fronts

One is the direct infringement, ie who is the creator? Is it the AI for creating it or the human who entered the prompt? Whoever created it is infringing, but again, probably not worth it to sue Joe Schmoe over it.

The second is that Midjourney hosts all of the images they generate, some of which are infringing. I'm guessing they're trying to use Safe Harbor protections, but I'm a little dubious that they can actually call the output of their own AI "user content". Users are promoting the AI, but Midjourney is still the one generating the content.