Tom simplified an expression in three steps, as shown:
x to the power of negative 2 multiplied by y to the power of 4, over y multiplied by x to the power of 4 multiplied by x to the power of 4 multiplied by y to the power of negative 2, the whole to the power of 4 equal to x to the power of 2 multiplied by y to the power of 8, over y to the power of 4 multiplied by x to the power of 8 multiplied by x to the power of 8 multiplied by y to the power of 2 equal to x to the power of 2 multiplied by y to the power of 8, over y to the power of 6 multiplied by x to the power of 16.

which is the first incorrect step and why?

step 1, all the exponents are increased by 4
step 2, the exponents of the same base are added during multiplication
step 3, the exponents of the same base are subtracted during division
step 3, all the exponents are added during division