1. **State the problem:** Simplify or factor the expression $a^2b^2 - c^2$. 2. **Recall the formula:** This expression is a difference of squares, which follows the rule: $$x^2 - y^2 = (x - y)(x + y)$$ where $x$ and $y$ are any expressions. 3. **Identify $x$ and $y$:** Here, $x = ab$ and $y = c$ because: $$a^2b^2 = (ab)^2$$ 4. **Apply the difference of squares formula:** $$a^2b^2 - c^2 = (ab)^2 - c^2 = (ab - c)(ab + c)$$ 5. **Final answer:** $$\boxed{(ab - c)(ab + c)}$$ This is the fully factored form of the given expression.