When I create ASP.NET Web API project, it references all system dlls which are stored in packages folder. When I deploy it to production environment, can I drop those dlls in GAC? I don't know why those system dlls not installed in GAC already when I stall asp.net MVC 4. Are they moving away installing DLLs in GAC?
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No, do not deploy those DLLs to the GAC.
See this answer: https://stackoverflow.com/a/2451201/48082
Deploy those DLLs to your app bin directory.