Word-level Annotation of GDPR Transparency Compliance in Privacy Policies using Large Language Models

Ensuring transparency of data practices related to personal information is a fundamental requirement under the General Data Protection Regulation (GDPR), particularly as mandated by Articles 13 and 14. However, assessing compliance at scale remains a challenge due to the complexity and variability of privacy policy language. Manual audits are resource-intensive and inconsistent, while existing automated approaches lack the granularity needed to capture nuanced transparency disclosures. In this paper, we introduce a large language model (LLM)-based framework for word-level GDPR transparency compliance annotation. Our approach comprises a two-stage annotation pipeline that combines initial LLM-based annotation with a self-correction mechanism for iterative refinement. This annotation pipeline enables the systematic identification and fine-grained annotation of transparency-related content in privacy policies, aligning with 21 GDPR-derived transparency requirements. To enable large-scale analysis, we compile a dataset of 703,791 English-language policies, from which we generate a sample of 200 manually annotated privacy policies. To evaluate our approach, we introduce a two-tiered methodology assessing both label- and span-level annotation performance. We conduct a comparative analysis of eight high-profile LLMs, providing insights into their effectiveness in identifying GDPR transparency disclosures. Our findings contribute to advancing the automation of GDPR compliance assessments and provide valuable resources for future research in privacy policy analysis.