Why have so many platforms decided to label and limit LLM-outputs? An Akerlof "market for lemons" reading of the evidence

Platforms are increasingly labeling and limiting AI-generated content due to a surge in its volume, as evidenced by various sources. For instance, AI tracks on Deezer rose from 28% of daily uploads in Sep-25 to over 50% by Jul-26, though their streaming share remained around 3%. On Reddit, machine-generated posts peaked at 8-9% in certain communities during 2022-24. Additionally, about 35% of new Internet-Archive English pages were categorized as AI-generated or AI-assisted by mid-2025.

This analysis uniquely applies Akerlof's "market for lemons" theory to explain why platforms are labeling AI content, unlike other reports focusing solely on volume or policy.