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This functionality is already built into the iPhone - in the Notes app, and also in the Files app. What does your software add?

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Why is my first thought that this has a clever backdoor to find passwords and crypto keys?

Probably one of many

Integrated, single purpose app. Most people don’t even know Notes has OCR. I didn’t until late last year, even though I’ve been iPhone user since the original came out.

The camera and photos.app has ocr as well.

Whenever im wanting to copy text on an app that hijacks the clipboard (LinkedIn/Slack) I take a screenshot, highlight the text, and copy as you would normally.

Try searching universally for stuff like invoice and you will get a copy of the invoices you have taken a picture of.

Google photos has a feature where it recognizes documents like credit cards and so you can search for them.

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