It's just so surprisingly tone deaf when things like this are done by companies that exist purely within the goodwill of their customers. Nothing that funko brings to the table has inherent value. If they have any world outlook other than to love their customers as much as they can, then they will fail in a time measured in quarters.
I'm pretty sure Funko used their service in good faith and didn't know it's based on over-aggressive AI bullshit. They're still on the hook for picking a bad company to partner with, but I don't think they intended to take down the entire domain.
I don't see a large message on the Funko site with a profuse apology for taking down Itchio. This indicates to me they fully endorse their action and are not willing to make amends.
Former employer worked a little with Funko and Disney, and it was pretty comparable. I don't see what Funko has to offer other than Licensing IP and strictly enforcing their own. Based on my (limited) experience, I doubt they chose this service by accident.