Where did I say something about 'trust' and 'government'? Seriously, I don't get the connection.
If the government is being attacked by a specific 'group', the government will then have the power to impose specific, targeted regulations on that group's web presence. Without the legislation, this is a matter of freedom of speech and is quickly resolved by the first amendment. It would be incredibly difficult to fight that off.
However, with legislation in place that affords the government the power to impose such regulations, they can quickly and most importantly (read terrifyingly) silence people on the web.
We already do it with every other industry, social media only enjoys a lassaiz-faire regulation environment because of how new it is, the law hasn't caught up.
The reason why I think a law would be the appropriate solution is
- that the companies have no interest in changing anything towards an (e.g., privacy friendlier system) as it would endanger their market position and therefore their profits
- in the current situation, the majority of people has few alternatives, so they can't 'buy their facebook somewhere else'
- for new competitors, it is quite hard to compete even with a single product not to mention a whole set of them
So it doesn't look like the market will find a solution anytime soon. I am not a fan of too much regulation either. Many laws have problems addressing the real issue and take too long until their are changed appropriately, but most laws cause costs anyway (not just financially).