As best as I can tell, it's the "I'm successful, so I must be brilliant" Dunning-Kruger effect on full display.

"It would make me look awful if we had any privacy issue, and I know AI is trendy, so I'm going to confidently claim privacy is important for 'our' use of AI."

Even at tech startups, the founders / executives / board advisors / etc. are only concerned with their own personal success -- they just don't say it out loud.

The "bad publicity" of leaking confidential data is seen as much worse for the individuals' reputations within the companies (and in their careers overall) compared to violating copyright, which "is a problem for our legal department."