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I'm a little confused by this announcement; does this mean that I have to host my own Jitsi Meet server and that Element will connect to it, or does this new version of Element "bring its own" Jitsi?

I host my own instance of Matrix / Element Web, so this would be great if it's not too difficult to set up.

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Yes. You can point it at your own instance of jitsi or at a public open one. I'm currently hosting jitsi as well but still trying to figure out how to make it not publicly available while still being usable in Element. I have configured my self hosted element web to point at my instance but if a user logs into the matrix home server with e.g. the element app it will still have the public element jitsi pre configured afaik.

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