It is illegal to use copyrighted material period outside of fair use, and this is most certainly not.
Yeah it is. Even assuming fair use applied, fair use is largely a question of how much a work is transformed and (a billion images) -> AI model is just about the most transformative use case out there.
And this assumes this matters when they're literally not copying the original work (barring over fitting). It's a public internet download. The "copy" is made by Facebook or whoever you uploaded the image to.
The model doesn't contain the original artwork or parts of it. Stable diffusion literally has one byte per image of training data.