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I had some PDF files and just try to open it and do some highlighting using Acrobat 10 (also called Adode Reader X)...

After highlighting, I save the file (using a different filename), and now the file change from 4MB to 3MB... is it just compression? Or making the images have lower clarity? (thought I cannot see any difference). What is the reason? If it is just compression, then why wasn't it done before, as winzip technology is quite mature more than even 10, 12 year ago.

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Lossy compression != Lossless compression.

Your file was probably compressed when saving due to some default options - but this is done by reducing image quality. The fact that you didn't see it doesn't mean it wasn't compressed. That's the main point of lossy compression.

Winzip - or to be precise, a variety of lossless compression technologies - are applied anyway.

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so you are saying there might be some better compression done (for images)... and it is lossless – 太極者無極而生 Mar 19 '11 at 8:46
@Jian I meant that both (lossless and lossy) compression techniques are applied. The fact that your file got smaller by 1MB was definitely due to lossy compression on the images, but you won't be able to see it, although it's lossy. Acrobat will then also apply some lossless compression, but this will definitely not squeeze 1MB out of your file! – slhck Mar 19 '11 at 9:16

acrobat automatically applies certain optimizations that shrink file size, unless you tell it not to. For example preferences --> general --> "save as optimizes for web view" checkbox.

Also if you run distiller, you can see the compression settings for all distilled PDFs. I'm just guessing, but maybe acrobat applies these settings when saving your changed file. This includes stuff like you see in the PDF optimizer section... whether or not to embed fonts, downsample images, compress tags, etc.

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Sometimes PDFs contains unused objects (and even unused images and fonts). That objects may be removed when PDF is re-saved.

It is also possible that some of the objects was not compressed in original PDF.

If you update your question with links to original and updated files I'll try to investigate what exactly led to such reduction of the file size.

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