I am not a lawyer and definitely not anyone’s lawyer providing legal advices, but I’ve done a little bit of work around implementing GDPR compliance at my jobby job. My understanding is that you must inform users when you’re sending their data out to third party processors, and they, too, must be GDPR complaint.

So if your instance is sending information that is covered under GDPR out to other instances, you much call out those instances as data processors, and ensure they’re complaint before you add them. When you add one, I think you’re also supposed to inform users that you’re adding a new data processor via some form of notice addressed to them. Furthermore, at time of deletion, you’d also need to inform your data processors of the request, such that their compliance workflow can be followed.

In my mind, strictly speaking, what Lemmy is doing could work if the “cluster” of GDPR compliant instances doesn’t federate out to the broader non-GDPR compliant instances. So, lots of manual maintaining the allowed federation instances, each time you add a new instance, you’d then need to inform your users… once you receive a deletion request, you’d need to use the ban with purge option to purge everything on your instance, and pass that on to all federated instances. The key distinction here is ensuring your federated instances honours your purge request, which is hard to verify.

The end result is that you’d essentially be creating your own bubble of the fediverse isolated from the rest of the fediverse… which is not an ideal outcome but that’s what happens when you let regulators decide what to do on things they don’t understand…