What is the primary characteristic of lossy compression formats like .JPEG?

Lossy compression formats, such as .JPEG, are designed to reduce file size by permanently removing some data from the original file. This process is beneficial for images as it allows for a significant decrease in storage space and faster loading times. However, the downside is that this reduction comes at a cost to image quality; some detail is irretrievably lost during the compression process.

When a .JPEG file is created, the compression algorithm analyzes the image and discards information that is considered less critical to the perceived quality of the image. This can lead to visible artifacts and a degradation in quality, particularly at higher compression levels. Therefore, the primary characteristic of lossy compression formats is indeed the data loss that affects image quality, which makes choice C the correct answer.