The Generalized Independent Set (GIS) problem extends the classical maximum independent set problem by incorporating profits for vertices and penalties for edges. This generalized problem has been identified in diverse applications in fields such as forest harvest planning, competitive facility location, social network analysis, and even machine learning. However, solving the GIS problem in large-scale, real-world networks remains computationally challenging. In this paper, we explore data reduction techniques to address this challenge. We first propose 14 reduction rules that can reduce the input graph with rigorous optimality guarantees. We then present a reduction-driven local search (RLS) algorithm that integrates these reduction rules into the pre-processing, the initial solution generation, and the local search components in a computationally efficient way. The RLS is empirically evaluated on 278 graphs arising from different application scenarios. The results indicates that the RLS is highly competitive -- For most graphs, it achieves significantly superior solutions compared to other known solvers, and it effectively provides solutions for graphs exceeding 260 million edges, a task at which every other known method fails. Analysis also reveals that the data reduction plays a key role in achieving such a competitive performance.

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