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That's not a bug nor a hardware issue, what you see is the digitizer/touchscreen.
As for the first comment
@BiswajitZ wrote:
It seems Xperia devices are famous for bugs whether it may be software or hardware.
If you check other brand's forums you could say the same about them.
That rainbow effect isnt a bug either " This is normal and its not coming from inside the screen its actually light bouncing on the glass that causes this phenomena. So depending on the lighting you can experience this."