So they started operating before the regulations were changed to accommodate their model. How exactly is this different from Uber?
Regular taxi companies obviously got angry at the new competition, there was some tire slashing, and eventually courts clarified the regulations in a way that didn't turn out bad for either party, and now they peacefully coexist. Regular taxis adopted some of the new ideas, too, and the overall quality of service improved for every company.
- actually broke any local law
- pulled any shenanigans with taxes or employment laws
- allowed nor encouraged drivers to operate with improper insurance
- messed with journalists
- used investor money to subsidize rides to the point no one could compete with their prices
Their one innovation was using GPS, which allowed them to avoid the need for training drivers in city kowlege (and the legal workaround they found thus let them operate under one company-wide transportation license), and to bill by distance instead of by time. The latter was actually a huge value for consumers, because it removed the price variation caused by congestion, as well as allowed the company to state the whole price up front, which made people trust them more.
2) Where I live - Kraków, Poland - we had iCar for years (they've expanded to several cities in the region now). Their app could use a facelift, true, but otherwise works fine, and in pre-app times, their phone dispatch worked well too.
I remember them first showing up when I was a teenager, 10 or so years ago. They had a conflict with regular taxi companies over their business model - a conflict which over the years got resolved in courts, and regulations were appropriately adjusted. I can point to that as an example of how to handle the issue in a civilized way.
There are also at least two companies that attempt to bridge different services in different cities under one app - Taxi.eu and myTaxi. They also work together with the regular taxi services (the evil "taxi mafias") too.