This is a complete oversimplification of everythin.
Yes, downloading music for free is theft. Creators do deserve to be paid for their work.
Youtube ignores fair use, which is wrong. But they run the platform, they can do what they like. ContentID is the worst idea they ever came up with. But again, they are just trying to avoid being sued over and over and over again, so I kinda understand their position. It sucks, but again, they have the right to do what they like with their own platform.
I would argue that using information for the training of an AI is fair use. The information is just used to set weights that the AI then uses to generate text. The actual text is not stored in any database anywhere. So whether Microsoft does it, or I do it, it is the same. I can train a LLM on data as well. I just don't have tthe money for the very expensive hardware to do it.