[oneshtein]

gzip is fast (pigz is even faster), supported everywhere (even in DOS), uses low amounts of memory, and compresses well enough for practical needs.

bzip2 is too slow.

xz is too complex (see https://bugs.debian.org/cgi-bin/bugreport.cgi?bug=1068024 ), designed to compress .exe files.

lzip is good, but less popular.

zstd is good and fast, but less popular.

[Spooky23]

Another factor is that gzip is over 30 years old and ubiquitous in many contexts.

Zstd is awesome, but has only been around for a decade, but seems to be growing.