I don't buy it. More regulation surely would change how software companies are valued, but I don't think lack of regulation is why they get valued so highly. Whether regulation here is good or bad I will not touch.

My first inclination for why things like Facebook and SnapChat are valued so highly is because investors operate under the delusion that reaching many eyeballs means profit. What they seem to not grasp is that there is a fundamental difference between things like print and TV ads and ads on Facebook. When Facebook was bought, I did a rough calculation that given their valuation and number of users they'd need to extract $50-60 on average from each user to justify the valuation. That's a huge number. Most I know people to date have given them exactly zero: they don't play the games, click on ads, etc.

Once the idea that having a huge number of inert users comes under test and we realize that it doesn't hold up, the valuations will plummet.