Google reduces JPEG file size by 35%

>New algorithm is based on human psychovisual system. Images look better, too.
Google has developed and open-sourced a new JPEG algorithm that reduces file size by about 35 percent—or alternatively, image quality can be significantly improved while keeping file size constant. Importantly, and unlike some of its other efforts in image compression (WebP, WebM), Google's new JPEGs are completely compatible with existing browsers, devices, photo editing apps, and the JPEG standard.

The new JPEG encoder is called Guetzli, which is Swiss German for cookie (the project was led by Google Research's Zurich office). Don't pay too much attention to the name: after extensive analysis, I can't find anything in the Github repository related to cookies or indeed any other baked good.

There are numerous ways of tweaking JPEG image quality and file size, but Guetzli focuses on the quantization stage of compression. Put simply, quantization is a process that tries to reduce a large amount of disordered data, which is hard to compress, into ordered data, which is very easy to compress. In JPEG encoding, this process usually reduces gentle colour gradients to single blocks of colour and often obliterates small details entirely.
The difficult bit is finding a balance between removing detail, and keeping file size down. Every lossy encoder (libjpeg, x264, lame) does it differently.

Guetzli, according to Google Research, uses a new psychovisual model—called Butteraugli, if you must know—to work out which colours and details to keep, and which to throw away. "Psychovisual" in this case means it's based on the human visual processing system. The exact details of Butteraugli are buried within hundreds of high-precision constants, which produce a model that "approximates colour perception and visual masking in a more thorough and detailed way" than other encoders.