I believe the argument here is that the way to do that isn't by establishing a private business that flaunts and undermines those government regulations, but by changing the policies through government process.

Obviously that's easier said than done, and SV has a track record of "ask forgiveness not permission" as a successful tactic for effecting policy change. But many times it results in indefinite undermining of government which leads to selective enforcement and cartels, which is worthy of criticism (of both government and VC-powered undermining of government).