I am very anti-social-media-regulation. Partly for the reasons you mention and partly because I see greater regulation balkanizing the internet and driving us increasingly farther from the promise of an egalitarian open internet.
As for alternatives, I think we just need people to collectively decide that some other platform (ideally a decentralized one) is better than the incumbent. Facebook depends on its inertia. Suppose every Facebook use went cold turkey and switched to something else instead (let's say Mastodon for the sake of argument). In a year, nobody would be talking about Facebook's monopoly.
Where I think things get sticky right now, though, and I'll even say -the- reason we haven't seen innovation in social media, is that incumbents on the scale of Facebook have the capital sufficient to either buy or sue any plausible competition into the ground before the competition has a chance at taking their market share. Imagine a world where Facebook had been blocked from burying Instagram and WhatsApp with money!
I think I would be in favor of greater regulation against these winner-takes-all tactics on a more economic level, although exactly how that regulation would work in a way that was both fair and non-trivial to evade I don't know.