I can imagine labels signing artists and also owning distribution rights regarding their likeness because of the Drake and Kanye songs.
It wouldn’t surprise me if using diff voice with someone elses voice except your own will be considered illegal in one shape or form.
Regardless, they probably handle it the same way like they do with unlicensed remixes on youtube, it stays online but the label collects all the money or they just remove it all together. As far as I know covers are only valid if all tracks are self produced.
Grimes opinion doesn’t surprise me at all, Elon Musk probably explained to her that it is basically additional passive income, considering how much of a savvy businessman he is.