Regulation is what starts the ball rolling. I won't dispute that the outcome is often sub-optimal in some ways (like the one you cited) But the point is that the result is a whole apparatus which acts to preserve the status quo: the regulators themselves (who like being employed), the operators that are profiting from the system, etc.

I'm trying to stay away from the political hot potato of whether taxi regulation is a net positive thing or not! It's not really relevant to the point I'm making.

Whether it's profit or bureaucracy that are the drivers now, I think we agree: Uber must have known this was coming. I look forward to seeing what Uber has planned; perhaps operating a dispatch service over regular taxis?