The increasing prominence of generative artificial intelligence (AI) in automated content generation raises pivotal questions regarding its economic impact on creation platforms. In this paper, we employ a game-theoretic approach to analyze the impact of adopting generative AI tools on various market outcomes, including creators’ creativity level and pricing strategies, the platform’s regulatory strength, and consumer welfare. We find that the platform opts for a relatively low regulatory strength when the AI intelligence is relatively small. Interestingly, as generative AI acquires a more extensive knowledge base, the platform and creators may be less willing to adopt it. Moreover, our results show that creators’ creativity level experiences a decline compared to the regime with such tools. We also find that even though generative AI has the potential to improve content quality, it is not always true that the utilization of such tools can lead to higher consumer welfare.