diff --git a/mac/VibeTunnel/Core/Services/EventSource.swift b/mac/VibeTunnel/Core/Services/EventSource.swift
index ee76a55c..52152167 100644
--- a/mac/VibeTunnel/Core/Services/EventSource.swift
+++ b/mac/VibeTunnel/Core/Services/EventSource.swift
@@ -1,6 +1,12 @@
 import Foundation
 import os.log
 
+extension Data {
+    var hexString: String {
+        map { String(format: "%02hhx", $0) }.joined()
+    }
+}
+
 /// Event received from an EventSource (Server-Sent Events) stream
 struct Event {
     let id: String?
@@ -46,13 +52,18 @@ final class EventSource: NSObject {
         let configuration = URLSessionConfiguration.default
         configuration.timeoutIntervalForRequest = 0 // No timeout for SSE
         configuration.timeoutIntervalForResource = 0
+        // Disable automatic decompression for SSE streaming
+        configuration.httpAdditionalHeaders = ["Accept-Encoding": "identity"]
         self.urlSession = URLSession(configuration: configuration, delegate: self, delegateQueue: nil)
     }
 
     // MARK: - Connection Management
 
     func connect() {
-        guard !isConnected else { return }
+        guard !isConnected else { 
+            logger.warning("Already connected, ignoring connect request")
+            return 
+        }
 
         var request = URLRequest(url: url)
         request.setValue("text/event-stream", forHTTPHeaderField: "Accept")
@@ -68,10 +79,13 @@ final class EventSource: NSObject {
             request.setValue(lastEventId, forHTTPHeaderField: "Last-Event-ID")
         }
 
-        logger.debug("Connecting to EventSource: \(self.url)")
+        logger.info("🔌 Connecting to EventSource: \(self.url)")
+        logger.debug("Headers: \(request.allHTTPHeaderFields ?? [:])")
 
         dataTask = urlSession?.dataTask(with: request)
         dataTask?.resume()
+        
+        logger.info("📡 EventSource dataTask started")
     }
 
     func disconnect() {
@@ -85,6 +99,7 @@ final class EventSource: NSObject {
     // MARK: - Event Parsing
 
     private func processBuffer() {
+        logger.debug("🔄 Processing buffer with \(self.buffer.count) characters")
         let lines = buffer.split(separator: "\n", omittingEmptySubsequences: false).map(String.init)
         var eventData: [String] = []
         var eventType: String?
@@ -181,13 +196,19 @@ extension EventSource: URLSessionDataDelegate {
         didReceive response: URLResponse,
         completionHandler: @escaping (URLSession.ResponseDisposition) -> Void
     ) {
+        logger.info("📥 URLSession didReceive response")
+        
         guard let httpResponse = response as? HTTPURLResponse else {
+            logger.error("Response is not HTTPURLResponse")
             completionHandler(.cancel)
             return
         }
 
+        logger.info("Response status: \(httpResponse.statusCode), headers: \(httpResponse.allHeaderFields)")
+
         if httpResponse.statusCode == 200 {
             isConnected = true
+            logger.info("✅ EventSource connected successfully")
             DispatchQueue.main.async {
                 self.onOpen?()
             }
@@ -202,12 +223,23 @@ extension EventSource: URLSessionDataDelegate {
     }
 
     func urlSession(_ session: URLSession, dataTask: URLSessionDataTask, didReceive data: Data) {
+        logger.debug("📨 EventSource received \(data.count) bytes of data")
+        
+        // Check if data might be compressed
+        if data.count > 2 {
+            let header = [UInt8](data.prefix(2))
+            if header[0] == 0x1f && header[1] == 0x8b {
+                logger.error("❌ Received gzip compressed data! SSE should not be compressed.")
+                return
+            }
+        }
+        
         guard let text = String(data: data, encoding: .utf8) else { 
-            logger.error("Failed to decode data as UTF-8")
+            logger.error("Failed to decode data as UTF-8. First 20 bytes: \(data.prefix(20).hexString)")
             return 
         }
 
-        logger.debug("📨 EventSource received data: \(text)")
+        logger.debug("📨 EventSource received text: \(text)")
         buffer += text
         processBuffer()
     }
diff --git a/mac/VibeTunnel/VibeTunnelApp.swift b/mac/VibeTunnel/VibeTunnelApp.swift
index 983c9b70..35e7466e 100644
--- a/mac/VibeTunnel/VibeTunnelApp.swift
+++ b/mac/VibeTunnel/VibeTunnelApp.swift
@@ -297,9 +297,8 @@ final class AppDelegate: NSObject, NSApplicationDelegate, @preconcurrency UNUser
                 statusBarController?.updateStatusItemDisplay()
 
                 // Session monitoring starts automatically
-
-                // Start native notification service
-                await notificationService.start()
+                
+                // NotificationService is started by ServerManager when the server is ready
             } else {
                 logger.error("HTTP server failed to start")
                 if let error = serverManager.lastError {
diff --git a/web/src/server/server.ts b/web/src/server/server.ts
index 0c5d86b0..098936ae 100644
--- a/web/src/server/server.ts
+++ b/web/src/server/server.ts
@@ -397,12 +397,12 @@ export async function createApp(): Promise<AppInstance> {
   logger.debug('Configured security headers with helmet');
 
   // Add compression middleware with Brotli support
-  // Skip compression for SSE streams (asciicast)
+  // Skip compression for SSE streams (asciicast and events)
   app.use(
     compression({
       filter: (req, res) => {
-        // Skip compression for Server-Sent Events (asciicast streams)
-        if (req.path.match(/\/api\/sessions\/[^/]+\/stream$/)) {
+        // Skip compression for Server-Sent Events
+        if (req.path.match(/\/api\/sessions\/[^/]+\/stream$/) || req.path === '/api/events') {
           return false;
         }
         // Use default filter for other requests
@@ -412,7 +412,7 @@ export async function createApp(): Promise<AppInstance> {
       level: 6, // Balanced compression level
     })
   );
-  logger.debug('Configured compression middleware (with asciicast exclusion)');
+  logger.debug('Configured compression middleware (with SSE exclusion)');
 
   // Add JSON body parser middleware with size limit
   app.use(express.json({ limit: '10mb' }));