There's no clear line between 'hiding' and 'not showing'. You can leave just a million people or so, to be put around the monster, and simply not show him the rest. It is not like the AI is making every wall into the screen displaying the suffering on the construction of pyramids. Or you can kill those people and show it in such a way that the monster derives pleasure from it. At any rate, anyone whose death would go unnoticed by the monster, or whose death does not sufficiently distress the monster, would die, if the AI is to focus on average pleasure.

edit: I think those solutions really easily come to mind when you know of what a soviet factory would do to exceed the five year plan.