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API security is important in web development to ensure the secure exchange of data between systems. It revolves around confidentiality, integrity, and availability. Developers can implement security measures like authentication, data encryption, and input validation using PHP’s built-in functions and libraries. For example, hash functions can be used to create a unique fingerprint of data for integrity checking, and functions like filter_var() can be used for input validation. By understanding API security principles and using PHP tools, developers can create secure APIs that protect against threats.