Each instance owner is running these instances themselves, presumably out of the home, for free.
They could go after an instance owner, sure, but
There’s no “but”. They could fight a lawsuit, sure, but that’s time consuming and expensive, and why bother? The piracy isn’t coming from their instance, why should they have to fight a lawsuit for it? Piracy has its own instance, nothing has been defederated, they’re just not hosting the content on their server to save themselves the hassle down the road. I can’t imagine they’ll be the only one.