Is it possible for the garbage collector to free memory occupied by objects that reference each other in a cycle?

Yes, modern garbage collectors, including those used in Android (for example, Garbage Collector in ART), are capable of detecting and freeing memory of objects that reference each other in a cycle but are not reachable from root references.

This is possible thanks to algorithms based on reachability analysis of objects, not just reference counting. Cyclic references do not hinder the garbage collector if the objects within the cycle are not accessible from active code.

Therefore, reference cycles do not lead to memory leaks in modern garbage collection systems.