Earlier quoted context omitted.
Why "what the hell"? This is exactly what happened, and a logical consequence the moment IP addresses are classified as private data. Which it is in a system where it can be used to find the civil identity of the user, which is the case in Germany via Vorratsdatenspeicherung and the rampant misuse of the legal system. Note how the decision contains the question of whether leaking the IP was necessary. They noted it i…
The part I find hard to understand is how you decide whether it is a necessity to load external content. For example, say I want to embed an instagram post on my website. You could argue that I should talk to the person who took the picture and get a license for the image so that I can host i on my own domain rather than loading the content for instagram. In practice this is obviously much, much more cumbersome than…
If you want to make sure that you're not getting the balancing test wrong, you can always go for the legal basis of last resort: consent. Just ask the user whether you can load content from Instagram and only do it if they agree. In fact, since in parallel to the question of your legal basis under GDPR, you also have to comply with the cookie provision from the e-Privacy Directive, where there is no "legitimate interest" exception to the requirement to ask for consent, you will have to ask for consent anyway (as Instagram embeds place cookies).