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Software is also part of the world, just a very different part.

True, though I'm assuming by "the world", they mean that traditional processes which would have involved pen and paper and other non computer based tools and systems are all being redesigned to make use of computers, thus Software is eating them.

But AI is not replacing processes that rely on software with something that no longer relies on software. What AI is doing is it lets you replace even more processes that were not yet able to be handled by a computer with one that a computer can do, and thus it just helps Software eat even more of the world. Decision making and judgement tasks were not able to be successfully moved to computers prior to the recent advancements in AI, now some of those can be.

I think this is a reference class problem. One could also say software replaced work done in offices with work still being done in offices. (until recently) Most of the work was still done on literal desktops. but significant changes have been happening within the subset of the office and within the use of the desk.

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