That's how regulations work. You dictate to a private business its responsibilities to its customers or users. I don't understand why that isn't the right answer (although Europe seems to do far better about this than the US).
> Besides, do you really think governments want to see less information collected, when having that information makes it so convenient for them to obtain?
This is a tired argument. The government is huge. Not every department is the NSA, nor is every department the FTC or FCC.
You should, at the very least, already know that this is not a universally held position, but rather one that many people oppose as vigorously as you support it. Without descending into politics, suffice it to say that doing so has no particular guarantee of solving more problems than it creates. Quite apart from the people who work at and run Facebook having rights, too.
People use Facebook voluntarily. "Facebook but not evil" is a viable business model.
As much as I hate what Facebook is doing, I don't think this is anywhere near the right answer. Besides, do you really think governments want to see less information collected, when having that information makes it so convenient for them to obtain?