VPNs are often used for piracy, SPAM, and other nefarious purposes while residential proxies are primarily used to obtain access to data through web scraping. Large companies like Google are able to scrape the same sites without getting blocked already, and proxies help to level the playing field between innovative startups and established players. I can certainly understand the critique, but I strongly believe that the existence of residential proxies results in a lot more good than evil.
[1] - https://intoli.com