Some regulations are necessary. They ensure that we don't usually get feces in our food, etc. But this is a clear case of legislation directly interfering with competition.
This statement is completely impractical. I can't think of a single law that does not affect the markets in some way. By its nature, any regulation requires proof of compliance on the part of the regulated party. This will always create some costs, at least in time spent, to the regulated party. Since "established players", by virtue of being established, have more resources at their disposal, they can comply more easily than upstarts with much more limited time and money on their hands. Hence, any regulation will stifle innovation to some extent while benefiting the established players.
Creating and updating regulations for the benefit of the majority is exactly what democracy is supposed to do most efficiently. Taking that right away from the government would be tantamount to taking the government away entirely.
10 years ago taxi regulations were not stifling innovation enough to be detrimental to the majority. Over the past few months they have. Then they were updated democratically. The system worked.
I'm wondering what the regulatory fallout will be when Uber suffers their first (unfortunately apparently inevitable) rape incident.
It sounds like you've cited something that's technically true without any context, so it's unclear as to whether there is a trend, or if it's just hysteria.
I predict that driver-on-passenger crime will be less frequent, and easier to prosecute, in such a system, compared to the traditional-licensed taxis sector. And also: compared to 'gypsy' cabs that successfully pretend to be licensed cabs, because of supply and authentication problems inherent to the traditional system (but obsoleted by Uber-like services).
So if/when an unfortunate event occurs, the right response will likely be: his new system is already doing better than the traditionally-regulated category, and so no special regulations are needed – just vigorous investigation and prosecution of individual crimes.