In a vacuum, that logic holds. But remember that the government has made taxi driving very regulated for a long time. To become a driver you had to buy their medallion and follow all of their regulations. These regulations imposed a high fixed cost and many recurring costs on taxi drivers. Yes of course these regulations were also beneficial to taxi drivers by restricting their competition, but the point is that this deal was struck between the industry and the government and a lot of individuals staked their livelihood on the details here.
Now the same city governments are basically saying "thanks for all that investment, we are deleting it" when they let Uber and Lyft come in. The city officials also did this with an uncharacteristic speed, basically capitulating immediately in a world where it takes years and years to get anything done. Taxi drivers were rightly surprised and individually harmed, they played by the rules as they were written and were told to fuck off by a bunch of VC-funded engineers with big lawyers and bigger budgets.
This is not a good precedent.