Microsoft says it is "designed to be GDPR ready" and "operates as a data controller". The nine facts below are what that sentence means in practice, each quoted from Microsoft and linked to where it says it.
Who is the data controller?source
Both of you, separately. The terms: "You and Microsoft are independent Controllers of the Personal Data Processed in connection with the Offering."
A processor handles data on your instructions. A controller decides for itself. Installing Clarity is closer to introducing your visitors to Microsoft than to hiring a vendor.
Will Microsoft sign a DPA?source
Not as your processor. The terms: "neither of them are a "processor," "service provider," or equivalent status under Data Protection Law in connection with the Offering."
The data processing agreement a procurement review asks for (GDPR Article 28) is a contract with a processor, and the terms rule that role out. Until August 2026 the privacy page also said Microsoft could not sign "any additional terms or contracts (e.g., DPAs)"; that line is gone, and the terms now say it more precisely.
Can you delete one person’s data?source
No. "You need to delete the entire project to delete user’s data."
A GDPR erasure request for a single visitor cannot be honoured without destroying the entire project’s history. In practice that means it cannot be honoured.
How long is it kept?source
Recordings for 30 days. Favourites and "randomly selected sample of recordings" for up to 9 months.
The 30-day figure is the one usually quoted. The 9-month tail is the one that matters for a retention schedule, and it is a sample you did not choose.
Where is it stored?source
"Clarity data is stored in one of Microsoft’s US data centers." EU customers contract with Microsoft Ireland Operations Limited, which uses standard contractual clauses (SCCs) with Microsoft Corporation in the US.
So the data does go to the US, under SCCs between two Microsoft companies. Microsoft’s FAQ says EU customers "shouldn’t worry" about it. Whether that satisfies your own transfer assessment is your call; there is no EU-region option to pick.
What are the cookies for?source
"Any third-party cookies used by Clarity are to support operational purposes like advertising." The visitor opt-out Microsoft points to is the Digital Advertising Alliance’s, at optout.aboutads.info.
The opt-out being an advertising-industry mechanism tells you which category this sits in. That is not a leak or a scandal; it is the arrangement, stated plainly by them.
Can you use it on a health, finance or government site?source
No. The terms of use: "You will not use the Offering in connection with content which may contain sensitive user materials, such as health care, financial services or government-related information."
This is the sentence behind every "is Clarity HIPAA compliant" thread. It is not a compliance verdict; it is Microsoft telling you not to install it there.
What is the data used for?source
The terms: Microsoft may use personal data "for any purpose in accordance with the Microsoft Privacy Statement, including ... create user profiles for purposes that include advertising", and non-personal data for "training, fine-tuning, and evaluating machine learning models".
That is the price of a free tool, stated by the vendor. Note the split: the AI training clause covers non-personal data; the advertising profiles clause covers personal data.
What is masked by default?source
PII is detected and masked in the browser, so it "never reaches Clarity servers". The mode is one of "relaxed, balanced (default), or strict".
This part is genuinely well built, and better than a lot of paid tools. Worth knowing the default is balanced rather than strict, so the strictest setting is one you opt into.