My Galactic power is high, but character power low since my ships/characters are about 50% each of my total power. Most opponents in Grand Arena have 60-70% of their total power with their squads, thus making it almost impossible for me to win a match since its almost all about squad power. My squad is about 1.6Mil, most opponents 1.9-2Mil. You need to match character power to make the arena fair.
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The reason you're losing is not the gap in character power. That's especially not a reason for not being able to win a match at all. By 1.6 million character power, you should have something that can punch through some of their teams. And if not, it's not because of the matchmaking.
In practice, it can just as easily be a bunch of level 32 units with their abilities upgraded to level 3 for territory battles. Or middling characters you invested in for a certain job a long time ago that have been left out to pasture.
The person who beat me in the finals for our bracket had a hundred thousand character GP than I do. And by "beat me," I mean soundly whipped me and I didn't stand a chance. Their roster had more coherent meta teams, and I don't have a viable counter to a G12 Traya team. This isn't a bad matchup or a grave injustice. My opponent worked hard, built up good teams, used their roster well, and won their victory fairly. I was soundly and fairly outclassed, and that's okay.
Just because you FEEL it was fair doesn't MAKE it fair.
I think the main problem causing your grief is ship GPs being very bloated. I can't see a justification why their GP should involve character GP folded into it or why a ship should be worth 2.5x a character's GP. Even if pilot GP needs to be included, it should be involved as a low multiplier rather than full extent.
I have yet to see any match-up with such a big difference in GP. It seems like we are all matched with players of more or less the same GP.
The OP is talking about 300-400k squad GP difference (not total GP). All of my opponents from each GA have had a 200k or better advantage in squad GP because I am in a similar situation as the OP (45% of my total GP is in ships).