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Unless these instances are showing ads and selling data, I'm pretty sure they're protected from the law. Not only that but if you're not hosting in the EU that law doesn't apply to you.
Making money is not a requirement for the GDPR to apply. Neither is being based or hosting in the EU.
In fact, the example the EU provides on their site is of a company that offers free services (and is based outside of the EU):
https://commission.europa.eu/law/law-topic/data-protection/reform/rules-business-and-organisations/application-regulation/who-does-data-protection-law-apply_en
The problem here is how does that work? If I host something in the USA, how is someone going to bring a lawsuit towards me if I am also in the USA?
Asking honest questions here. As this just sounds like a lot of chest thumping from the EU.
"Provided your company doesn't specifically target its services at individuals in the EU, it is not subject to the rules of the GDPR."
Just say, we don't provide or target EU individuals and you're free.
Don't allow users from the EU to sign up? Is that your plan?
Seems to be the plan for an increasing number of social media companies. As far as Lemmy is concerned, if it and other related services get killed, that just drives us underground to the darknet and the old tried and true chat services still being used there. As the old saying goes, can't stop the signal, and every empire falls to ruin eventually. We'll see how long it takes for Rome to crumble this time.
Wouldn't it be easier to fix the delete federation bug so Lemmy could comply with GDPR ?
No, just say in the Terms, that the target audience isn't the EU.