Ideally the internet would not need regulation, if only people cared more about doing whats right...and not what makes your shareholders rich.
I think the unfortunate reality is whenever there's money involved, certain players will win over and time and become gigantic and by the very nature of their being at the top, they are unethical. Naturally, the less ethical and more ruthless money makers win in the market if all other things are considered equal to their competitors.
Facebook's problems, and privacy violations in general, are different. It's not necessary to engage in mediated social interaction; you can opt out with no loss except convenience. There's no bodily harm, let alone death, so if you're burned once, you can simply never do business with them again.
That means the market could fix this problem. That it hasn't says that there aren't enough people who agree that it is a problem, or that the cost is worth the benefit to them. In a case like that, not legislation but education is the solution.
The problem is that avoiding doing business with them does not protect you from their behavior.
> That means the market could fix this problem.
Maybe, maybe not. But generally speaking, the free market cannot fix all problems, and particularly has an issue fixing problems that are imposed on people who already don't do business with the bad actor.