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Good question.
If it is making recommendations from your sideloaded books, that means that it is sending this information back to Kobo's servers.
I think that it would be difficult to determine what a sideloaded book is with any accuracy, but that may be good enough for determining your recommendations. Matching on the Title, Author, and other ID information (like an ISBN) may get Kobo close enough to your sideloaded books to use them for recommending others.
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