Which means that, if this continues indefinitely, more and more things belong to fewer and fewer people - which is exactly what we've been seeing over the last couple of decades.
The actual issues of our current world happen because this pure version of capitalism doesn't happen. There's all sorts of things which lead to non-efficient people / organizations accumulating a lot of capital.
In general, it's not true that companies would merge without regulation. Why would Apple merge with Samsung? It doesn't make any sense.
Usually, regulation causes monopolies to form. A prime example is the patent system, which literally grants a monopoly to an idea. There would be much more competition without IP protection laws, which in my opinion doesn't belong in capitalism. For example, if all Apple's patents and copyrights were openly licensed, there would be much more competition with higher quality, but cheaper products.
Are we forgetting how Microsoft absolutely dominated the PC market in the 90s and early 2000s? How today, there's basically two mobile operating systems that can determine much of today's mobile experience?
I agree that IP laws serve to entrench monopolies (although they also have the effect of encouraging development (e.g. of expensive drugs) in the first place - so it's a double edged sword). But so do a lot of other, much more "natural" mechanisms such as network effects, brand recognition, etc.
I feel like the libertarian, "pure capitalism" world view only makes sense if you think that consumers are omniscient and perfectly rational, but we know fully well how neither of these things are true.
I used to work for a company that would just buy up a bunch of smaller companies and then drive them into the ground. The smaller companies had the better tech, but the large company had a user base, a brand and money.
It's true that there are a lot of natural centralizing forces, such as network effects. Not sure how to resolve those.
However, getting back to the original point, no matter how you think about it, capital efficiency requires that 'a few' manage the capital, because naturally there are 'a few' who manage capital better than the rest. The problem is selecting those few. I think it's a misconception to argue that capital shouldn't centralize in principle, or that it's a morally bad thing.
Also, efficiency in a free market is really about fulfilling the needs of people according to their free will in the most efficient way possible. There's no forcing function to produce more if people don't want to consume more. In Soviet Union, they were very efficient at producing some stuff, but they made stuff that no one needed (they made lots of cheap shoes in big factories, which no one wanted). I.e. there's a difference in being efficient in isolation, and efficient at fulfilling needs of the market.
And I don't believe that this is what we should optimise for. "More of everything, for cheaper" somehow doesn't seem to make people happier. I think that more shared ownership is more important, especially if you consider the effects of increased inequality on intangible goods such as democracy (e.g. how currently a few tech companies can influence global political discourse).
But even if I was willing to concede your point, somehow most people who argue for "pure meritocratic capitalism" never seem to suggest that we should have a 100% inheritance tax. Because people being born into wealth is exactly one of the reasons why "non-efficient people" (a problematic term in and of itself, btw) end up accumulating a lot of capital.
(I don't personally believe we should have a 100% inheritance tax, although I think it should be higher than it is right now in most places, but I think that this would be an almost inevitable conclusion of a "purely meritocratic" conception of economics.)
Historically in America or current day in developing countries, the rate of growth in living standards negatively correlates with the amount of regulation.
It is of course true that some (bad) regulation, like protectionism of various sorts, can also lead to the same outcome in a different way.
People who are well off have more opportunities to start other ventures that make them even more well-off, and if they're especially powerful, they can use that influence to further their benefit. I don't think that's particularly controversial.
Capital begets capital.
On the other hand, we have the diminishing marginal utility of money - rich people overspend all the time, often on frivolous stuff. Musk bought an entire publicly traded company and crashed it on the way home, the way an upper middle class person might a shiny red Dodge Viper. One might say the VC ecosystem is chiefly 'dumb' money sloshing around trying to not be left out of the next big thing, while having no clue what that might be.
Talking about "completely unregulated" markets is also somewhat specious. In a completely ancap context, we'd likely get structures similar to governments, funded by wealthy people cooperating rather than continuing to compete in less-productive ways (say through physical force). In fact some might even say that this is the character of the current US government in a few different regards.