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File compression is a process that reduces the size of a file while maintaining its original content. There are two primary types of compression: lossless and lossy. Lossless compression algorithms, such as those used in ZIP, RAR, and 7z files, ensure that the compressed file can be restored to its original state without any data loss. Lossy compression, commonly used in image and video files, discards some of the data to achieve a smaller file size, resulting in a slight degradation of quality.