| The daily disasters, glitches, and money pits of the AI boom. |
| THURSDAY, OCTOBER 22, 2026 |
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| DAMAGE REPORT |
| How millions get wasted by AI. |
| $137M | spent on AI-made political ads this cycle, against under $50,000 in 2024 |
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| 7.57% | Korea’s Kospi lost on October 15, as rates and data center costs spooked traders |
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| 30.9% | US firms where rehiring cost more than their AI layoffs saved |
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| 6,800+ | Meta Muse chat links anybody could find in public DNS records |
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| TODAY'S DISASTER |
| Kakao Pulled the Plug on Its Kanana AI App. On One June Day, 66 People Downloaded It. |
| Do you remember the last app you downloaded and never opened again? I’ve got a phone full of them… and so does Kakao. |
| Two years ago today, Kakao, the company behind South Korea’s biggest messenger, unveiled an AI app called Kanana. Its two chat buddies, Kana and Nana, would sit in your group chat… and sum it up. |
| CEO Chung Shin-a had the money side figured out. She told investors the plan was a subscription. |
| But here’s the catch. Kanana lived in its own app, apart from KakaoTalk… so every friend in the group had to download it too. Who does that? Almost nobody. |
| Let me show you. Installs peaked at about 19,000 on May 15, 2025, a week into the beta. By June 14, the day’s total was 66. ChatGPT was pulling in over 30,000 a day. |
| No engineer told Kanana to be lonely. But nobody built it to go where the people already were. |
| Kakao switched it off on October 15, 525 days after the beta opened. |
| So who caught it? Lee Gyu-lee at The Korea Times, one month in. The headline called Kanana a nonfactor… more than a year before Kakao admitted it. |
| AI CAUGHT LYING |
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| I check one list every morning… Damien Charlotin’s count of court cases where a machine made up the law. He’s at 2,202 cases worldwide, as of the update he posted on October 19. Here are three from this month. None of them came with a fine. |
| Start in Quebec. On October 1, the Quebec Court of Appeal caught two judgments that don’t exist in a family appeal, drafted with AI by an appellant who had no lawyer. The other side wanted $10,000 in damages. The three judges said no… but they ordered the appellant to pay court costs, to sanction the conduct. |
| Then Britain. The same day, Judge A. Seelhoff signed a ruling against an Afghan asylum seeker whose skeleton argument leaned on two country guidance decisions. Neither one exists. So the judge called them likely AI hallucinations… and dismissed the appeal on every ground. |
| And Wisconsin. On October 7, federal Judge James D. Peterson found two fake cases in a suit against the state university’s regents. One came with a made-up quote. The plaintiffs’ lawyer admitted using AI. There’s no fine, just a note telling counsel to do better next time. |
| AI CASH BURN |
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| Tesla’s research bill hit $2.76 billion last quarter, up 69%. |
| That’s from Tesla’s results on Wednesday. Electrek ties the jump to Optimus, the Cybercab and a project Tesla calls “Super Intelligence.” Operating income fell to $718 million from $1.624 billion… a 56% drop. And capital spending more than doubled, to $4.73 billion from $2.25 billion a year earlier. Free cash flow fell to $1.53 billion from $3.99 billion. Would you pay double for a business earning less than half? I wouldn’t. |
| Step back and Tesla’s got company. Arete Research says Alphabet, Amazon, Meta and Microsoft will spend $1.8 trillion on capex through 2028… $600 billion more than their businesses will bring in as cash. Who covers the gap? I’d want to know before I bought. |
| So the IMF ran the bad case in its outlook last week, in Bangkok. If AI spending drops hard, the world loses 1.1% of GDP by 2028, and America loses 1.8%. Kristalina Georgieva, who runs the IMF, says we’re “standing on one leg, the AI leg.” |
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| AI ROLLBACK TRACKER |
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| › Meta paused sharing in its Muse AI agent on October 20. Security firm Claroc found more than 6,800 Muse share links in public DNS records… and many opened with no login. One held a small-business owner’s loan application. Muse had been out for just 42 days. |
| › Clover School District in South Carolina blocked most AI tools on student devices on October 21. Only SchoolAI stays… and elementary kids don’t get that either. The district says it needs time to protect student information and set rules, and it admits its filters can’t catch every AI site. |
| › The White House’s America.gov chatbot stopped answering election questions a day after launch. On day one, it said federal reviews found no 2020 fraud big enough to change the outcome. By day two, it had a new answer… “I do not provide political commentary or analysis of past elections.” |
| › Australia scrapped Robodebt in May 2020. The automated scheme had been sending welfare debts since 2016… and many of them were wrong. The government agreed to repay 470,000 debts, and a court approved a settlement of A$1.872 billion in 2021. But Colleen Taylor, a department worker, had raised the alarm inside back in 2017. |
| AI VIDEO SLOP |
| The week in machine-made video. Watch the hands. |
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| ► 34 LIKES, 109 COMMENTS |
| Swedesboro Brewing Company in New Jersey gave its beer an AI spokeswoman named Sarah. She pitches the brewery’s three spots… and she can’t drink a drop. Commenters on Reddit and Instagram asked why the brewery didn’t put its own staff on camera, and some said they’d stop going. So the brewery doubled down, and Sarah came back in a second video to answer the comments. Nerd Stash › |
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| ► FACEBOOK, OCT 4, NO VIEW COUNT PUBLISHED |
| A Facebook reel from a page called @TheHumanPyramid showed gymnasts building a giant human pyramid in 10 seconds. Look at the faces… some have no nose. Some hands end in a blob, and new gymnasts pop out of thin air. But the Guinness record pyramid, 10 tiers tall, took over three minutes to build. Lead Stories caught it. Lead Stories › |
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| ► X, SEP 24, NO VIEW COUNT PUBLISHED |
| An X video put President Trump in a hieroglyph cave beside two blond giants. Nobody else in the clip has a face you could name… and Hive and Sightengine both called it AI. The account that posted it on September 24 later admitted it got a Community Note. Lead Stories ran the debunk on October 19. Lead Stories › |
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| ALSO MAKING THE ROUNDS |
| Stacy Garrity’s campaign in Pennsylvania ran an ad with an AI Josh Shapiro cheering for data centers. It opens by thanking “big, beautiful data centers” for the AI. I had to read that line twice… Fortune covered it. |
| Ken Paxton’s Senate ad in Texas showed an AI James Talarico writing in a Bible… with a crayon. Talarico has tried to ban deepfakes by law. |
| A fake Buk-M3 clip, posted by the X account @drhafezster on October 10, claimed Syria’s army had a brand new air defense system. Facebook pages passed it along. Misbar rated it fake. |
| And here’s one for the detectors. Google’s own SynthID Detector tagged five genuine photos from UK politicians as AI… including one from the account of Jennie, MP Steve Darling’s guide dog. Full Fact flagged it, and Google pushed a fix on October 15. |
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| AI IMAGE SLOP |
| Pictures a computer drew, and a brand paid for. |
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| First Amendment LLC, a Virginia dark money group, mailed Wisconsin voters AI pictures of governor candidate David Crowley. One puts him on a throne under “KING OF TAXES.” The Cap Times says the face looks so off it doesn’t look like Crowley. But if you flip the mailer over, the back admits the AI. Cap Times › |
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WHITE HOUSE
TRUMP TV
AI PLANE CABIN |
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| The White House promoted its “Trump TV” livestream on October 2 with a picture of a whole plane watching it. The photo came from a 2023 Super Bowl flight… with the screens swapped. Nobody on that plane was watching Trump TV. MEAWW’s fact check found a SynthID watermark, and Hive pinned it on GPT Image 2. MEAWW › |
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NEXCON 2026
AI PROMO FLYER |
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| Nexcon, a gaming convention in Norman, Oklahoma, made its promo flyer with AI. That included AI versions of its guests… like fighting game pro SonicFox, who never agreed to it. So SonicFox canceled. And co-founder Ty Bailey owned up and said they couldn’t afford artists. Kotaku › |
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| BEST OF THE COMMENTS |
| Three people who said it better than we could. |
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| Swedesboro Brewing made an AI woman the face of its beer. |
| “Can’t wait for the AI generated apology once you realize how unpopular this is.” |
| @gusmckenna_, under the brewery’s Instagram post introducing Sarah. 14 likes as of this morning. |
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| Nexcon put an AI SonicFox on its flyer without asking. |
| “Use the money you offered me in contract to hire artists” |
| SonicFox on X, October 21, quoted by Kotaku. No like count published. |
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| A fake AI video put Trump in a cave with blond giants. |
| “got community noted kek” |
| @afrym76, the account that posted the clip, on X two days later. Quoted by Lead Stories. No like count published. |
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| Found a comment worth printing? Hit reply and send me the screenshot. |
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| Let me leave you with a question for tomorrow. |
| Kakao built Kanana, planned a subscription for it and pulled the plug 525 days later. On its slow June day, 66 people downloaded it. I’d bet you’ve got an AI app like that on your phone right now… opened twice, then forgotten. |
| So which AI app or gadget have you already given up on? And what made you quit? Hit reply and tell me… I’ll print the best ones. |
| Keep a hand near the switch. |
| Gus Lehman |
| EDITOR, ARTIFICIAL INCOMPETENCE |
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| SOURCES: The Korea Times on Kanana (Jun 24, 2025) · Digital Today on the Kanana shutdown (Sep 15) · Wesleyan Media Project (Oct 15) · Gotrade on the Kospi drop (Oct 15) · CPA Practice Advisor on the Careerminds survey (Jul 13) · PPC Land and Unite.AI on Meta Muse (Oct 20 and 21) · Damien Charlotin, AI Hallucination Cases database (updated Oct 19) · Quebec Court of Appeal, Droit de la famille 261553, 2026 QCCA 1300 · First-tier Tribunal, FJ v SSHD (Oct 1) · W.D. Wis., Duckett v. Board of Regents (Oct 7) · Electrek on Tesla Q3 (Oct 21) · Broadband Breakfast on Arete Research (Sep 21) · Reuters via Business Day on the IMF (Oct 13) · WSOC-TV on Clover schools (Oct 21) · RTÉ on America.gov (Oct 1) · Robodebt Royal Commission record via Wikipedia · The Nerd Stash · Lead Stories · Fortune · Misbar · Full Fact · The Cap Times · MEAWW · Kotaku · Images: Swedesboro Brewing Company via The Nerd Stash, Lead Stories, Lead Stories, Ruthie Hauge for The Cap Times |
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| ARTIFICIAL INCOMPETENCE |
Sent every weekday morning.
Nothing here is investment advice. Do your own homework. |
