I think that it´s an easy position to take.

If the government sides with Uber it loses the money he get from the (outrageously expensive, like you said) licenses, and has a lot of unhappy voters (taxi drivers).

What would it gain ? Better service ? Lower prices, more fares ? Happier citizen ? That is really all to be demonstrated.

It´s a very rational decision in my opinion, on part of the government, although I might not agree with it.

On the human side, I agree that taxi drivers deserve sympathy, but no more than other owners of traditional businesses that are made obsolete by progress (small CD shop owners, bookstores, photo development shops)...