There will always be an information and power asymmetry between ordinary people/consumers and special interests/corporations.
Sure, people could form consumer rights groups, boycott companies with unconscionable data collection policies, demand a sane and afforable health care system, etc. But people have a limited attention budget. It's just too hard to care about everything, so people don't.
That's also why we don't have proper regulation; if we cared about having a functional, efficient government we would, but we don't really care that much.
With this being the case, more small companies would be able to compete, at least in theory.
That being said, I believe you are correct. It just seems that the only way to improve things is to get to the point where people do think before purchasing, regardless of the state of State.
As far as having an efficient state goes, I would find it more likely that it's not going to happen because those in power have incentive to maintain the current status. It both provides opportunities for corruption and gives an excellent platform to run on.
Important is that you choose which pros and cons you find important.
However, the way things currently stand now in a middle ground appears far from optimal. There is too much lobbying for there to be enough regulation to be effective, but too much regulation for there to be proper competition. While I believe a middle of the road approach could work, in our current circumstance it isn't.
My ideal path would be to go to a complete free market, and rebuild regulation from there. While rebuilding regulation, actually have legislators listen to experts, and ban lobbying. This will never happen of course, but I can dream.
Edit: Make tone less authoritative, because I need to work on that.
It's the fact that we exist in a middle ground between proper regulation and a proper free market. Either of those, and we'd be able to do fine. As it is, we get the downsides of both.