Facebook Inc.’s climb to the pinnacle of business success was nurtured by a grand policy experiment: that a light regulatory touch would turbocharge innovation and make consumers wealthier and happier. Companies who mistreated their customers would succumb to competitors, or be punished with rules already on the books.

The events of the last few months suggest the experiment may have run its course. It has left Facebook effectively an unregulated monopoly and despite founder Mark Zuckerberg’s latest apologies, the company...