Because when enough of the money is in an index fund, you can predict how a large part of the investors are going to invest (using the same algorithms they're using) and adjust based on that.
It may be possible that although they can't beat other active investors enough to justify their fees, they can beat a big dumb index fund enough to make their services worthwhile. That remains to be seen however.
So instead if active fund managers "knowing the market better", we'll get active fund managers, "knowing the passive investor crowd better".
This is madness.