Hello Adam Steenwyk ,
Thank you for this detailed post. Today we opened an Microsoft with Tracking ID#2406121420000153 on that subject.
We can provide the information requested in the ticket but I think this is a waste of time. It is this new feature causing the issues we experience.
As described in the comments, we are also using a non-persistent, stateless VDI (300 Clients \ 1000 Users) solution and since activating this feature, users have been experiencing massive problems with constantly blocked and reappearing logins. By the way, my company is a Swiss company that would not actually be affected by EU legislation.
Can you please help us and maybe redirect the ticket to the appropriate location or team?
Any help would be much appreciated! Thank you very much