Classic regulatory capture play. Create regulations so onerous that only a company with the resources of Facebook can operate under their restrictions. Lock in your dominant position. No small competitor can get a foot in the door.
The big players will push for regulations, licencing, and standard, ensuring that their next competitor can't come from a few smart people tinkering in their garage or their dorm room.
A good example is the toy industry, where requirements for chemical and safety tests which cost tens of thousands of dollars per SKU, keep mom and pop shops making wooden toys from their garage. (Well, they do anyway, but can be stopped at any time if they get too big.)
The idea that small competitors should be able to launch with minimal capital, and the idea that social media vendors should protect users' data, are fundamentally in tension. It costs money to protect user privacy, full stop. Yeah, it's possible for a Facebook/Microsoft/Google/whoever to bend the regulations to widen their moat, but it's the job of the regulatory bodies to ensure that the regulations are fair.
The question shouldn't be "should we regulate social media?" The answer, IMO, is a resounding YES. The real question should be "who should be in charge of building those regulations?"
That's an interesting idea, is it actually what you are suggesting?
The line of demarcation could be storing personally identifying information, interfacing with advertising networks, or maybe even ownership of certain patent/intellectual property rights.
Hard problems require complex solutions. It’s not easy for small companies to get “a foot in the door” in the space or auto industries either. Content moderation is a hard and unsolved problem — so yes, companies with more resources will have a better chance of succeeding.