“As the legal ownership of such AI-generated art is unclear, we cannot ship your game while it contains these AI-generated assets, unless you can affirmatively confirm that you own the rights to all of the IP used in the data set that trained the AI to create the assets in your game,” their first warning letter stated.
“we reviewed [Game Name Here] and took our time to better understand the AI tech used to create it. Again, while we strive to ship most titles submitted to us, we cannot ship games for which the developer does not have all of the necessary rights. At this time, we are declining to distribute your game since it’s unclear if the underlying AI tech used to create the assets has sufficient rights to the training data.”
Considering most AI tools can’t really claim to have legal rights to all their training data (and even if they do, it may still not be an ethical use of that data), this policy as stated basically amounts to a blanket ban on AI-generated assets in games.