SC-900 Practice Question: Describe the capabilities of Microsoft compliance solutions
A company stores customer data in Microsoft 365 and needs to identify which data is subject to GDPR. Which Microsoft Purview solution should be used?
⚠ Common exam trap
SC-900 often tests the distinction between discovering/classifying data versus protecting or retaining it — candidates incorrectly pick DLP when the question asks only to identify what data is subject to a regulation.
Answer choices
Why each option matters
Answer the question above first, then reveal the full breakdown to understand why each option is right or wrong.
Correct answer & explanation
✓
Data Classification
Microsoft Purview Data Classification uses sensitive information types (SITs) and trainable classifiers to automatically identify and label data matching regulatory patterns such as GDPR. It provides the discovery and classification layer that reveals which content is subject to GDPR obligations. Without classification, an organization cannot know where GDPR-relevant data resides across Microsoft 365 workloads.
Answer analysis
Option-by-option breakdown
For each option: why learners choose it and why it is or isn't the right answer here.
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Data Lifecycle Management
Why it's wrong here
Data Lifecycle Management (DLM) in Microsoft Purview focuses on managing the retention and deletion of data throughout its lifecycle, ensuring compliance with organizational policies and regulatory requirements. This involves applying retention labels and policies to data based on its classification, but DLM does not perform the initial discovery or categorization of sensitive data itself. DLM acts upon data that has already been identified or classified, rather than being the mechanism for classification.
- ✗
Data Loss Prevention
Why it's wrong here
Data Loss Prevention (DLP) policies are designed to identify, monitor, and protect sensitive information from unauthorized sharing or transfer, both within and outside the organization. While DLP policies leverage sensitive information types and classifications to detect specific data patterns, its primary function is to enforce protective actions like blocking, encrypting, or alerting, not to perform the initial comprehensive discovery and classification of all sensitive data for compliance purposes. DLP is a protective measure that *uses* classification, rather than the classification process itself.
- ✗
Audit
Why it's wrong here
Microsoft 365 Audit logs record user and administrator activities across various services, providing an immutable trail of who did what, when, and where. While essential for security investigations and compliance reporting on actions taken, auditing does not analyze the *content* of data to identify personal information or classify it according to regulatory requirements like GDPR. Its purpose is activity tracking and accountability, not data content discovery or categorization.
- ✓
Data Classification
Why this is correct
Data Classification in Microsoft Purview is the foundational process of identifying, categorizing, and labeling sensitive information, such as personal data subject to GDPR, across an organization's Microsoft 365 environment. This involves using sensitive information types, trainable classifiers, and sensitivity labels to automatically or manually tag data based on its content and context. Accurate data classification is crucial for understanding where sensitive data resides, enabling organizations to apply appropriate protection, retention, and compliance policies.
Go deeper
Related to this question
Learn chapter
Information Protection and DLP
Key term
Data classification
Data classification is the process of organizing data into categories based on its sensitivity, value, and criticality to an organization, so that appropriate security controls can be applied.
Key term
GDPR
The General Data Protection Regulation (GDPR) is a European Union law that sets strict rules for how organizations collect, store, process, and protect the personal data of individuals within the EU.
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JA
Written and reviewed by Johnson Ajibi, MSc IT Security
Senior Network & Security Engineer · founder of Courseiva
Last reviewed September 2026 · checked against the official Microsoft exam blueprint
This SC-900 practice question is part of Courseiva's free Microsoft certification practice question bank. Courseiva provides original exam-style practice questions with explanations, topic-based practice, mock exams, readiness tracking, and study analytics to help learners prepare for the SC-900 exam.