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In this video tutorial, the presenter discusses what an API (Application Programming Interface) is and its role in data extraction from social media websites to store raw data in analytics databases. An API, defined as a communication protocol between software applications, establishes rules for developers while interacting with programming languages. A common misconception is that APIs can extract all data; however, they can only retrieve specific data from dedicated resources based on requests. For instance, if one aims to monitor prices, the API will provide the requested price but not additional, unrequested information.