You're right --- what the article describes and what proponents have in mind is actually more extreme and far worse.
But just like in "company towns", corporate overlords are the only real authority as they proclaim their independence yet still mooch services from the surrounding area as needed.
The take away discovery from similar experiments in the past has typically been --- there is no free lunch. Isolated authoritarianism (masquerading as libertarianism or mislabeled as "freedom") is just as far from a utopia as any other system --- and maybe even more so.
Slowly but surely, even the cowboys on a cattle ranch come to realize that the ranch isn't being run for their benefit. And being branded a "company man" doesn't really impart "freedom" but instead takes it away.
What the article describes is pretty sensationalized and full of bias.
Obviously there is plenty of room for it to go wrong but I don't think it's automatically the case that somehow paradoxically, giving the government less control over a region will make that region more authoritarian. I would expect the null hypothesis to be the opposite.