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In this video tutorial, the creator demonstrates how to reduce the file size of photos on an iPhone by changing the camera settings to high efficiency format. This setting captures photos and videos in a format that reduces file size but may lower quality. To do this, go to the settings application, scroll down to the camera settings, and select high efficiency format for smaller file sizes. This will use the HEIF/HEVC format instead of JPEG/H.264, which will result in smaller files but slightly reduced quality.