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From the perspective of a server operator, it actually makes a lot of sense. The operator of a PDS needs to be able to moderate the content on their PDS. We don't need bad actors creating spaces just to store their CSAM. That would be Very Bad™.
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If, then, I sign into VeryPrivateService.at with my atproto account, I should have the same expectation that operators of that service have visibility into my otherwise permissioned content... right?