I do not care about the failure reporting decision, but my inner lawyer has failed me and so I do not grasp the presumed privacy problem.
I assume that a domain operator has a right to audit inbound and outbound traffic to ensure compliance with acceptable use policies, to tune spam filtering and correct filtering errors, and to resolve whatever technical problems may arise in normal operation. Besides, some mail flows without encryption, so messages may be captured. More importantly, some large platforms are presumed to be doing pervasive surveillance. If there is any expectation of privacy, how does failure reporting represent a terrible breach of that expectation? Doug Foster
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