I have been toying (more like sitting on it :|) with the idea of creating an app for in-browser extraction of zip files that have been uploaded to SharePoint document libraries. It seems now however that Microsoft beat me to it. 🙂
If you have modern libraries enabled in your O365 tenant and you click on a zip file uploaded to a library, you will now notice that SharePoint will actually show you all the files within that archive within the browser – effectively extracting the zip file for you in the browser. You can then chose to download the entire archive or browse through folders and sub folders in the zip archive to download individual OR multiple files & folders from the archive. You still are not able to view in the browser the files from the archive so may be my app is still viable for now lol
A picture speaks (on in this case pictures) more than a thousand words so here it goes:
Fig 1: A Zip file in a modern SharePoint library
Fig 2: Zip file expanded to the first level
Fig 3: Zip file expanded to the second level – notice how you can choose to download a single folder from the zip archive
Fig 4: Zip file expanded to the third level – again, notice how you can choose to download multiple files from the zip archive
Gaurav Mahajan 
Do someone experience problem with zip preview of zipped files which are zipped with non unicode characters? I have zips that contain files with Cyrillic names and when these zips are made on windows pc with Bulgarian locale selected in windows regional settings for language for non-unicode programs, the preview in SPO is showing giberish for the names.
Sorry, I have not had the opportunity to work with a multilingual scenario like this but hopefully someone else has. Thanks!
Gaurav,
Excellent. Since Microsoft has a habit of not telling us when the enhance something I missed this. Question: have they opened up this ability in the CSOM or JSOM? I was wondering if I could develop a SharePoint page that could extract something from the zip and ingest it without downloading? For instance, lets say there was a JSON file in the zip and my page first wanted to read that file. Any ideas on how to do this?
Chris!
Thank you! I tried that in the past and don’t believe you can do that through JSOM/ CSOM. You will need to use 3rd party libraries such as these:
https://stackoverflow.com/questions/37876051/opening-zip-files-in-browser-with-filereader-and-jszip-js
https://gildas-lormeau.github.io/zip.js/
Cheers!
Hi Gaurav, it seems this feature has been discontinued. I could not see this in my tenant, I verified in others too.
Hi Abhishek. I dont believe that’s true. Here’s a screenshot from my tenant. Here’s a screenshot: https://i.imgur.com/3tuDCKz.png
Also, I would make sure you are in the modern experience and not the classic one
Is there a setting either in SharePoint or in the zip file itself that controls whether or not files can be individually downloaded? I have customers saying they could do this, but now all of a sudden something changed and they cannot. I can’t see any way to make this happen.
Hi Rachel
I dont believe that directly downloading individual files from an archive was ever possible. At least I am not aware of it.
Thank you