For clarification, they are only rejecting games with AI-generated content trained with datasets not owned by the creator. If a game uses AI trained in content owned by its company, it's fair game.
That sounds worse than a complete AI art ban.
If you're an amateur dev with an idea, some programming skill and zero budget, you can't use AI art to make your game look a little better than all the crappy asset flips.
But if you're a big studio with a portfolio to train the AI on, you can cut 90% of your art team to use mostly AI.
Indie devs lose, artists lose and big corps win, as usual
I think you're underestimating how huge a dataset has to be to get a somehow decent AI output.
The effort to create those custom in-house datasets would never be worth the prospect of not needing artists anymore. There is a reason current AI is mostly trained with sources of dubious legitimity. They just need as much data as they can gather.
AI generation is only profitable if you conveniently ignore where your source material comes from.
This feels like the worst of both worlds. The whole ai "pitch" for the masses is that it can help small devs with no, say, art skills. This just ensures the corpos have free reign to do whatever they want.