Ah yes, for that elusive "malloc-safe" spec requirement.
In the microcontroller case you can get a 32bit ARM Cortex M0 for $2.00 qty 1 these days, allowing the bit-twiddling you find in compression libraries to compile successfully. Having a fast malloc-safe compression library is extremely useful. lz4 is an example of one which you can run on a microcontroller successfully, but isn't as compatible as zlib is.
One such example are large SAN storage systems. We can have gigabytes or even a terrabyte of ram and still have very little spares (little by our standards < 100MB for diagnostics and general OS nuisance).