Compression

Compression in Veeam Backup for Microsoft 365 helps you save storage space and reduce costs incurred by your cloud storage provider for maintaining backup data.

Compression works in the following way:

All chunks of data that are larger than 512 bytes are subject to compression; each blob file that is created is compressed first and then saved to object storage.

To compress data, Veeam Backup for Microsoft 365 uses the ZSTD algorithm. For more information about this algorithm, see this Zstandard article.

Compression is done by the backup proxy server that you specify at the Specify Backup Proxy Server step.
Certain types of data such as images or other media files cannot be compressed properly. Thereby an output compressed blob file becomes larger than it could be if it was not compressed at all. In such a scenario, the uncompressed version of the file will be saved.