> But on the other hand, no IP means economy of scale is a lot more important, and that favors huge corporations.
"IP" is the thing that favors economies of scale.
Suppose you're a manufacturing company and you want to make your own computers. You're great at making the chassis and screen and batteries and things like that, but to make a whole device you also need an operating system, a compiler, a web browser, a CPU, etc.
If you're free to use existing ones then you have a chance. If you have to develop every one of those things in-house because every existing one is the property of an incumbent who is using it as a moat then you have to be a megacorp or you're sunk.
Notice that this is what all of the smaller companies actually do. Every small consumer device OEM and some of the big ones are using some variant of Linux/Android or BSD rather than developing their own OS. NeXT, the scrappy company Apple bought and turned into Mac OS X when they were themselves the underdog, was based on BSD. RISC-V has shipped more than 30 billion cores and is taking a decent chunk of the embedded market from ARM, which is itself a company that licenses its designs to companies that compete with each other (and run Linux on their chips) rather than using exclusivity and mandatory vertical integration to try to monopolize the whole supply chain. Which is how the mobile market went to them rather than Intel and Microsoft. Who themselves took the desktop and server markets from even more vertically integrated mainframe companies.
The availability of composition is what allows you to be a small company that does one thing well. Which is the thing you can't do when someone else has a monopoly on something you don't make but need, and correspondingly isn't willing to sell it to someone who is trying to compete with them in a different part of the supply chain.
Moreover, the economies of scale you're talking about on the other side actually have diminishing returns. Suppose anybody who wants to make a product that typically sells for $100 has to buy a $10,000 machine in order to do it, but then can make an unlimited number of them. If you're so small that you only ship 100 units, the cost of that machine by itself is adding $100 to the cost of producing of each unit and you're pretty screwed. But if you're a medium sized company and you ship a million units, it's only adding one cent. The advantage of the medium company over the small one is dramatic. Whereas the megacorp that ships ten billion units shaves it down to 1/10000th cent, but then the advantage of the megacorp over the medium one is still less than one cent.
On top of that, it's often something like you need a $10,000 machine that can make a million units even if you only use it to make a hundred, and then the scale advantage of the medium company over the small one is all still there, but the advantage of the megacorp over the medium one doesn't even exist because then to make ten billion units they need ten thousand machines.
Which is even before we get to diseconomies of scale: The larger an entity is, the more efficiency you lose to bureaucracy, coordination costs, principal-agent problems, internal politics, etc.
There is a reason industries with low barriers to entry tend not to monopolize. Why is there no monopolist who grows all of the coffee or weaves all of the clothing? Shouldn't "economies of scale" allow a single huge company to out-compete all of these little ones in the absence of anyone having a way of excluding competitors?
Conversely, find a consolidated industry and you'll generally find some kind of government-backed monopoly or regulatory capture.
