| The daily disasters, glitches, and money pits of the AI boom. |
| WEDNESDAY, OCTOBER 28, 2026 |
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| DAMAGE REPORT |
| How millions get wasted by AI. |
| $175B | Microsoft’s forecast 2026 capital spending, cited in Monday’s Reuters report |
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| 60,000 | employees offered voluntary buyouts, approximately; not a count of departures |
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| $10,000 | fine Judge F. Kay Behm imposed on a lawyer and his firm |
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| A$8,371.30 | personal costs ordered against the lawyer in JNE24 |
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| TODAY'S DISASTER |
| REI Switched Off the AI That Gave a Bicycle Two Sets of Handlebars |
| Would you buy a bike with handlebars under the seat? I wouldn’t. |
| But REI advertised one in June… after an AI tool altered a photograph supplied by bicycle brand Van Rysel. The picture already showed a product REI could sell. The software added a second set of handlebars. |
| And customers spotted the problem. Cyclists also questioned the brakes, frame details, and chain. You didn’t need a computer science degree… just a look at a bicycle. |
| REI said Meta had automatically enrolled the retailer in an AI personalization tool. Meta declined to comment to Business Insider. Don’t confuse REI’s account with an admission from Meta. |
| What didn’t the software check? Whether the bike in the ad matched the bike for sale. That’s my test for any product picture… before the marketing team pays to show you one. |
| Cyclist Amity Rockwell had taken part in the original professional shoot. Van Rysel said the later alterations weren’t its work. |
| So REI apologized and said it had unenrolled from the tool. Customers checked the picture. REI switched the automation off. Keep the person who knows the product in charge. |
| AI CAUGHT LYING |
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| Three courts sent three bills for unchecked AI work, each in its own currency. I’d read the rulings together… before paying for legal research a chatbot hasn’t checked. A fluent answer doesn’t prove the cited case exists. |
| Michigan, September 9, 2026. In Fay v. Warren Hospitality Suites, Judge F. Kay Behm fined attorney Schroeder and McKeen & Associates $10,000 jointly. Counsel acknowledged AI use and at least eleven unsupported citations. But the client won’t pay. The judge barred deductions from Janice Fay’s settlement. |
| Australia, August 15, 2025. In JNE24, an anonymized lawyer used Claude for research and Copilot for validation. Four challenged citations reached court anyway. Judge Gerrard ordered A$8,371.30 in personal costs and a referral to Western Australia’s legal regulator. So a second chatbot wasn’t a substitute for reading the cases. |
| Quebec, October 1, 2025. In Specter Aviation v. Laprade, Jean Laprade submitted AI-assisted arguments containing false or irrelevant authorities. Justice Luc Morin ordered C$5,000 in costs. And representing yourself didn’t excuse handing the court unchecked material. |
| AI CASH BURN |
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| I’d read Microsoft’s $175 billion spending forecast before admiring another AI demonstration. Reuters cited that calendar-2026 capital budget on Monday. Capital spending buys assets… so don’t label the whole budget a loss. |
| But Microsoft’s cost controls reach people too. On October 26, the company said approximately 60,000 employees would be eligible for voluntary buyouts. The offer covers participating teams in Canada, India, Britain, and the United States. Chief People Officer Amy Coleman described support for employees considering departure. That’s an offer… not 60,000 completed exits. |
| So here’s what I’d check when Microsoft reports after today’s market close. How much cash did the business produce, how much went into infrastructure, and what returns does management expect? A hiring budget and a construction budget can head in different directions. Neither proves the machines earned their keep. Read the cash figures before accepting the promise. |
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| AI ROLLBACK TRACKER |
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| › Microsoft Tay, March 2016. I’d start with Microsoft’s own apology. Tay produced offensive tweets after coordinated abuse. By March 25, Peter Lee confirmed the chatbot was offline. Microsoft said another launch would require stronger protection against malicious users. |
| › Linagora Lucie, January 25, 2025. The French public demo was suspended after users exposed false answers, including claims about eggs laid by cows. But Linagora acknowledged the model lacked safeguards and wasn’t ready for educational or production use. Users supplied the check the launch lacked. |
| › MagicSchool Raina, January 28, 2026. MagicSchool retired the student-facing companion persona after concerns about children’s attachment to chatbots. OPB found Bend-La Pine’s technology director was still defending Raina weeks later. So be precise… students retained access to a neutral assistant. The entire platform wasn’t switched off. |
| › Meta Galactica, November 2022. Meta withdrew the public science demo after three days of criticism over fabricated research and false answers. Researchers Carl Bergstrom and Gary Marcus challenged the output. And the distinction matters… the demo closed, while downloadable model resources remained available. |
| AI VIDEO SLOP |
| The week in machine-made video. Watch the hands. |
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| ► VIEWS NOT PUBLISHED |
| A whale whose tail comes out by its head. Would you trust the dramatic ocean clip? Lead Stories found an anatomical glitch in footage posted by @usanewshq on September 30. The supposed whale surfaces between boats… then the tail emerges from the head’s direction. The payer isn’t disclosed. Sarah Thompson checked the footage. Lead Stories › |
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| ► VIEWS NOT PUBLISHED |
| A polar bear rescue with an AI label left behind. I’d check the first upload. Lead Stories traced the rescue story to @anton.yehorov’s October 21 Instagram reel. The account identifies its videos as AI-generated… and the reel carries a disclosure. Copies circulated as an animal rescue. No sponsor or production bill was identified. Lead Stories › |
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| ► VIEWS NOT VERIFIED |
| The two-chatbot job interview was a parody. Don’t count the clip as evidence of a hiring disaster. Graham Dot Zip told Lead Stories he’d staged the meeting, while leaving the AI responses improvised. Victor exaggerates experience and offers a salary Graham rejects. And Alan Duke checked with the creator. Funding wasn’t disclosed. Lead Stories › |
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| ALSO MAKING THE ROUNDS |
| I’d check the other pictures passing through your feed too. Lead Stories found an AI fertility chart with misspelled labels. A supposed Maui photo pairing former presidents with Jeffrey Epstein carried evidence of Google AI. Another fabricated image paired Beyonce with Trump and Epstein. And fake Walmart receipts used a Florida town that doesn’t exist. Four reasons to check the source… before passing the picture along. |
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| AI IMAGE SLOP |
| Pictures a computer drew, and a brand paid for. |
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J.CREW AND VANS
THE BACKWARD ANKLE |
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| J.Crew’s nostalgic campaign had a foot problem. I’d inspect the ankle. Blackbird Spyplane flagged inconsistent faces, a backward-pointing ankle, and a questionable camera in the Vans collaboration images. J.Crew later credited Sam Finn Studio for digital art. PetaPixel documented the glitches… and the revised credit. PetaPixel › |
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QUEENSLAND SYMPHONY
LOOK AT THE HANDS |
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| Queensland Symphony Orchestra advertised a concert with tangled fingers. You can hear musicians without inventing the audience. The orchestra’s 2024 ad showed distorted hands and rows of violinists where listeners should sit. The Media, Entertainment & Arts Alliance objected publicly. But QSO defended experimentation. Artnet documented both responses. Artnet › |
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| Wizards of the Coast defended the image, then corrected itself. I’d check the bulbs and gauges. Fans including artist Tom Cartos challenged the promotional background in January 2024. Wizards first denied AI use… then acknowledged AI elements and said its vendor process needed changing. The disputed background wasn’t the artwork on the cards. TechSpot › |
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| BEST OF THE COMMENTS |
| Three people who said it better than we could. |
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| AI ALTERED REI’S PROFESSIONAL PRODUCT PHOTO |
| “The more you zoom in the worse it gets” |
| A Reddit commenter, quoted by Inc., June 26, 2026. Handle and like count not published. |
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| J.CREW USED AI TO DEPICT A PHOTOGRAPHER |
| “The insult to photographers by AI-generating images of a photographer. Priceless” |
| Ryan Allan, on J.Crew’s Instagram campaign, quoted by PetaPixel, September 2, 2025. Like count unavailable. |
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| WIZARDS’ AI BACKGROUND DIDN’T PASS A HUMAN CHECK |
| “Either you are lying to us or your artist is lying to you.” |
| Tom Cartos (@CartosTom), X, January 5, 2024, quoted by TechSpot. Like count unavailable. |
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| Found a comment worth printing? Hit reply and send me the screenshot. |
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| Here’s my obituary for Azure’s Anomaly Detector service. Retired October 1, 2026. The product checked data for unusual patterns… but a retirement notice still needs a person to read it. |
| Microsoft’s documentation names the date. The notice doesn’t establish that a malfunction killed the service. So check the lifespan of the tool before you build your business around the subscription. |
| Keep a hand near the switch. |
| Gus Lehman |
| EDITOR, ARTIFICIAL INCOMPETENCE |
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| SOURCES: Inc., June 26, 2026, and Business Insider via Yahoo, June 2026 (REI); Reuters via CNA, October 26, 2026 (Microsoft, including a company memo); Fay, ECF 232, September 9, 2026; JNE24 [2025] FedCFamC2G 1314, August 15, 2025; Specter Aviation, 2025 QCCS 3521, October 1, 2025; Microsoft, Peter Lee, March 25, 2016 (Tay); Linagora, January 25, 2025, and CNN via WRAL, January 27 (Lucie); OPB, Jen Baires, February 14, 2026, with the district clarification reported by The Source, February 19 (Raina); AIAAIC and Nature Machine Intelligence (Galactica); Lead Stories, Sarah Thompson, October 2 and 23, Alan Duke, October 18, Sarah Thompson, Ed Payne and Alexis Tereszcuk, October 27, and Sarah Thompson, October 15 (video cards and roundup); PetaPixel, September 2, 2025; Artnet, March 7, 2024; TechSpot, January 8, 2024; Wizards of the Coast, January 7, 2024; Microsoft Learn (Anomaly Detector retirement). Images: Lead Stories (whale and polar bear), Graham Dot Zip / YouTube (interview parody), Wizards of the Coast via TechSpot (Magic promotion). |
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| ARTIFICIAL INCOMPETENCE |
Sent every weekday morning.
Nothing here is investment advice. Do your own homework. |
