Perhaps thats part of the issue. Next time someone tells you about their Instagram clone, laugh at them. An alternative to government intervention is a cultural shift, a change in what society holds in high regards. If we all start laughing at clones, people might stop making them.
I'm not sure that's really an improvement. One of the nice things about Silicon Valley is that ideas that are laughed at elsewhere are taken seriously here. And a lot of the time, the people doing the laughing end up eating their words later.
Remember that the search engine market was crowded and considered a commodity backwater when Google entered it; all the smart money was betting on portals. The cloud storage market was crowded and considered a commodity backwater when DropBox entered it. The PC market was crowded and full of hobbyists and also-rans when Apple entered it. In each case, they did things enough better than everyone else that everyone forgot that there'd ever been competitors.
Except this time people are laughing because everyone else is doing it instead of what most of the rest of the world does, which is laugh at you because they think it's impossible or not worth trying because it's so risky.
Apple is an exception and had a clear idea of how they were going to do things differently. If you were to come up to me and say you were starting a smart phone company without a concrete idea (and the previous experience or intelligence to back it up) of how you were going to do things differently or how you were going to make an affordable phone without the scale of Apple or Motorola, I think I would laugh.
I'm talking about Apple in 1977, not Apple in 2007. At the time, most of the innovations that made them popular (Woz's wizardry with color displays, the floppy disk controller, the strategy of selling for large discounts to schools, and certainly the Xerox PARC visit) were way off in the future.
Google and DropBox were also laughed at because it was what a number of other companies were doing, not because what they were attempting was technologically impossible. Most outsiders had no idea that what Google was doing was technologically impossible, because, well, they heard "search engine" and thought "AltaVista".
It's the nature of innovation that you figure things out as you go along. If you have all the answers when you start, you're not innovating. And that implies that you have to start somewhere, usually where a bunch of other people are starting, and so of course things will be crowded when you're just a startup. It's all the stuff that happens in-between being an Instagram clone and going public with a wildly different product that matters.
