It definitely makes it clear what is expected of AI companies. Your users aren't responsible for what they use your model for, you are, so you'd better make sure your model can't ever be used for anything nefarious. If you can't do that without keeping the model closed and verifying everyone's identities... well, that's good for your profits I guess.
Did X do enough to prevent its website being used to distribute illegal content - consensual sexual material of both adults and children?
Now reintroduce AI generation, where X plays a more active role in facilitating the creation of that illegal content.