With the release of Minecraft 1.13, snooper settings was removed from the game with no explanation. Then, also with no explanation, Minecraft 1.18 re-introduced it in the form of Telemetry Data, but unlike before you cannot disable it fully.
You claim that this data is anonymously collected in order to "improve the experience of the game for players", yet still collect their XUID and other information relevant to that person's device, tying it to their real identity. In 1.18 you couldn't enable or disable it at all (it was always turned on), but as of 1.19.3 you can only toggle between "All" and "Minimal". Even if this data is collected for the sake of improving how players interact with blocks, entities, objects, and whether or not major updates can run on lower-end PCs, the problem with this system is the fact that it can't be toggled off at all. You might argue that even for privacy concerns, it technically doesn't break the GDPR, however that doesn't make it right to collect information that users did not consent to of their own volition.
I'm not saying telemetry shouldn't be made available for those who want it. Rather, that along with "All" and "Minimal", players should have the liberty of turning telemetry "Off" in its entirety. No one should have to resort to workarounds just to safeguard their data, and this will save Microsoft and Mojang from risking breaking any future changes to the GDPR, if any. It will also build trust from this community in you both.
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