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But this will be triggered only while uploading to iCloud, so if you are not using iCloud for photos the algorithm will never run? Or that’s why I understood.

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For now, the next step is to do on device scanning with fuzzy hashes whatever that means.

What does that mean?

Correct, Apple confirmed this hash-matching is only for their own iCloud Photos service (and appears to be designed with that service in mind).

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