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They can host all the default mirrors themselves, either by serving the actual data (with a CDN) or by redirecting requests to a 3rd party mirror by GeoIP.

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Which would be an insanely expensive way to collect very little usable information. Mirrors are run for free by volunteers, a worldwide CDN to replace free mirrors would be prohibitively costly for a relatively small distro like Manjaro.

Wouldn't the cost of the service scale basically linearly with the user base? So a small distro would have smaller costs?

I agree with the core point that tracking users via package updates is a bad idea, but I don't think this specific argument is very great.

Presumably they can use Cloudflare or similar for free or relatively cheap, or perhaps find someone willing to gift CDN service to a Linux distribution.

Redirecting the requests to the closest existing mirror also obviously drastically reduces bandwidth requirements and should presumably be doable with a few (for redundancy) colocated dedicated servers running efficient server software.

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