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> Instead of communicating a copy of the image, Google provides HTML instructions that direct a user’s browser to a website publisher’s computer that stores the full-size photographic image.

https://en.m.wikipedia.org/wiki/Inline_linking

It seems Google saved its butt with that explanation. Can you do the same?

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Mostly true, image search results are shown to the user using a base64 encoded thumbnail representation of the source. Focused view results in a request made to the source image inline with Google's site. They definitely store & process copies. Color search, subject search, none of that is possible without storage of some kind. Freshness searches require polling resources with modest frequency, too.

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