Self-regulation is good enough and way cheaper.
It doesn't work
It may be much cheaper but companies have no motivation to self regulate when profits are determined by ever more uses and abuses of AI. Facebook is a classic case in point. Despite all the posturing by the company, it is the algorithms that are in control, driving engagement and advertising profit. The only way self regulation would work in this example would be for the companies using user data to manipulate them to stay on the platform, would be for them to remove the algorithms and not harvest users internet activity. This would massively impact profits which is why they won’t act.
Subscription only
Government regulation to take responsibility for content won’t work because this overturns the concept of social media and free expression. A better business model would be a subscription model and one that doesn’t feed the world with fake news and conspiracy theories by deliberate filtering and promotion of such content.