Actually I wonder if the end result would end up essentially being, you can only federate with other GDPR compliant instances that you trust will respect the GDPR and honor federated data delete requests.
The core of the issue is that just by the virtue of running, an instance collects a stupid amount of data. I was baffled at how many user accounts my instance had discovered mere hours after starting it up.
Edit: row counts after just a week of running my private instance with only 3 users:
The profiling potential is scary, so users should be really careful with basically every interaction on the Fediverse, including votes. I bet the feds are having a field day monitoring what’s going on on exploding-heads and lemmygrad.