There is no step 2. The worst parts of social media and ad clearinghouses (Jesus, all the scams Google promotes and makes money off of) are destroyed, anything remotely defensible survives. Personalized "algo" feeds and "algo" suggestions? Untenable. Customized ads served from a system no human monitors or checks to make sure they're not serving blatant scams at a massive scale? Gone. Both the incentives and ability to try to connect strangers with one another in ways they didn't directly ask for? Greatly diminished.
Ad-supported media survives (for better or worse). People can still communicate just fine. People can still publish without trouble.
So? What value have these platforms provided that justifies their existence?
I'm not sure they should be fully liable but being fully immune is ridiculous. I don't know what the answer is but the current incentives are not working.