The correct first step is to understand the existing context. A proper LIA requires a clear understanding of the purpose, necessity, and impact of the specific processing. Blindly applying existing assessments or halting business operations is impractical and may be unnecessary. The acquired company’s context (its relationship with customers, the nature of the services) is crucial for a valid assessment.

While commercial benefit is a component of legitimate interest, the specific projected revenue increase is less relevant to the data protection principles of necessity and proportionality. The core assessment focuses on the balance between the business need and the individual’s rights, the minimization of data used, the availability of less intrusive alternatives, and the transparency of the processing—not its precise financial payoff.

Legitimate Interests Assessments are not one-time exercises. The balance of interests can shift over time due to new technologies, changes in how the processing is implemented, evolving risks to individuals, developments in case law, or changes in societal expectations. Regular reviews (e.g., annually or biennially) are a key part of demonstrating ongoing accountability and compliance.

The legitimate interest of the controller must be clearly identified and substantiated. Improving customer service and operational efficiency through data-driven decisions is a valid, concrete business interest. The use of anonymization (if truly effective) changes the legal analysis entirely, a sign is about transparency not the interest itself, and competitor actions do not establish *your* legitimate interest.

A key part of the balancing test is considering the data subjects’ reasonable expectations. A group with a higher privacy expectation (e.g., existing customers in a B2B context, vs. cold prospects) weighs against the controller’s interest. This doesn’t automatically ban processing but requires enhanced safeguards—such as clearer transparency, prominent opt-outs, or more granular choice—to tip the balance back towards fairness.

A DPIA is a mandatory process under Article 35 GDPR for processing likely to result in a high risk to rights and freedoms. An LIA is the specific, recommended tool (not explicitly named in the GDPR but outlined by guidance) to justify and document the balancing test when relying on the ‘legitimate interests’ legal basis under Article 6(1)(f). They serve different, though sometimes overlapping, purposes.

Real-world outcomes and complaints are vital feedback for the ‘balancing test’ documented in the LIA. They provide evidence of the actual (not just theoretical) impact on individuals. This information must be documented and used to inform periodic reviews of the assessment. It may lead to adjustments in the processing (e.g., improving algorithm accuracy, creating faster appeal processes) to maintain a fair balance, but it doesn’t automatically invalidate the basis.

The principle of necessity requires a clear, specific purpose and an evaluation of whether the processing is targeted and proportionate to achieve it. Option 1 provides a concrete purpose, identifies specific risks, and explicitly considers less intrusive alternatives. The other options are vague, rely on peer pressure, or justify processing by the tool’s capability rather than a genuine business need.

The three-part test is: 1) Identify a legitimate interest, 2) Demonstrate the processing is necessary to achieve it, and 3) Conduct a balancing test. The core of the balancing test is to weigh the controller’s legitimate interest against the potential impact on the data subject’s interests, rights, and freedoms. If the impact is too great, the controller’s interests are overridden, and this legal basis cannot be used.

The correct first step is to understand the existing context. A proper LIA requires a clear understanding of the purpose, necessity, and impact of the specific processing. Blindly applying existing assessments or halting business operations is impractical and may be unnecessary. The acquired company’s context (its relationship with customers, the nature of the services) is crucial for a valid assessment.0