I don’t particularly like it but in this case it worked well: it identified someone who wasn’t working and then saved the company from litigation.

As long as companies don’t use it as some kind of metric then I don’t see an issue. I don’t assume privacy in the office, so why should my work be private?

If anything, such companies using keyloggers should be forced to openly state such practices to any potential employees. If they are really so proud of it, then don't be sneaky, let potential employees know about such practices and choose not to work for them.

Companies that need keyloggers, often have dysfunctional management and processes to evaluate employees, so need to resort to such desperate measures.