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x^{2}y^{2}-4
Multiply and combine like terms.
\left(xy-2\right)\left(xy+2\right)
Rewrite x^{2}y^{2}-4 as \left(xy\right)^{2}-2^{2}. The difference of squares can be factored using the rule: a^{2}-b^{2}=\left(a-b\right)\left(a+b\right).