The term the author needs is "diseconomies of scale." Economies of scale is unquestionably important for increasing value production and economic growth. However, if economies of scale is a positive feedback signal, it is diseconomies of scale that acts as a negative feedback signal, keeping the economy in equilibrium by recycling the old companies that fail to innovate and adapt back into the market, and providing opportunities for smaller, more innovative companies to gain a foothold before they achieve economies of scale. You see diseconomies of scale in companies that have multiple groups working on the same product, lack of oversight and skewed incentives, and overall organizational incompetence that often stems from complacency in a once innovative company.

This is where rent-seeking and regulations come into play. Having legal scale enables less innovative companies to get into the business of lobbying and regulating themselves. Most companies that are not completely dominant in the absence of government want to be regulated in certain ways, because it helps entrench them, such as Telcos, defense contractors, "software" consultancies like PwC, etc.

I've observed that your average Joe will immediately think a regulation is good for "the people" and bad for "the company" without context. In reality, it's important to determine if it's a good regulation: i.e., one that charges a proportional cost or mandates an antidote to an externality on society.

If the regulation instead creates occupational or corporate licensing requirements, or really is doing anything besides addressing the externality, you will most likely entrench the bad actors, add some inefficiencies for paperwork, possibly create other unintended consequences, and accomplish nothing.