I'm not saying they are doing it now, but what's stopping them from generating their own tracks? What's to stop them from creating some bullshit company to generate AI slop and then licensing music from themselves at fractions of what they'd pay a real artist just to keep up the illusion so that real artists don't leave their platform?

If a corporation can do something that will make them more money than they'd make not doing it you should expect them to do the profitable thing. Corporations don't care about ethics or even the law. Maximizing shareholder value is their purpose. They exist only to take from the many and give to the few. It's not a conspiracy theory to assume that they'll be doing exactly what they are designed to do.