You have misunderstood regulatory capture. Regulatory capture occurs when the regulator puts the interests of those in the industry ahead of consumers.
> In return, this regulation raised the startup costs so significantly that only the pre-existing large companies could adapt and new entrants effectively ceased to exist.
This isn't regulatory capture. Regulatory capture is things like making laws that it is only possible for incumbents to be licensed to do specific jobs.
For industries emerging from the innovation stage to the regulatory capture state, usually the first regulations increase the startup cost to some extremely high level that only the incumbents can support. Only in the advanced stages to governments grant monopolies to specific companies.
The stock market, oil/gas, telecommunications are all examples of industries that started as innovative with no regulation. Once established, they were regulated. The stock market got consumer protections. Oil/gas faced environment & safety regulations. Telecommunications face many regulations around zoning and providing rural and not always profitable access. In return, this regulation raised the startup costs so significantly that only the pre-existing large companies could adapt and new entrants effectively ceased to exist.
It's a bit of a tradeoff. As consumers, we get some benefits and the company gets their existence & rent guaranteed indefinitely. The same will happen with digital advertising and the gig economy. The public is already getting tired of the wild west and calling for regulation. This regulation will be twisted and controlled by the companies it impacts to secure their future.