Taxis are regulated and would be barred from operating if they fall out of compliance. this specific story is about taxi licenses which are of limited availability and costs a lot of money to get. Since Uber lobbied the govt for permission to operate without these, their value have freefalled and Uber is compensating the holders of those licenses.

That protectionism hasn't stepped up properly the past ten years only shows that maybe governments found they would benefit from letting the taxis get slapped around a bit. There will probably be more stories like this in the future as Uber has become entrenched and now will be pressured to get more proper.