I've been wondering the same as I'm reading this thread. I like the idea with a new model, especially one that get rids of the concept of taxi medallions, but I have an issue with what is essentially unfair competition.
The main issue, as others have pointed out, is that the network effects and barriers to entry with Uber are quite low, so even if they beat Lyft they won't be able to jack up prices well above cost. In Austin, Uber and Lyft left after city voters passed driver fingerprinting requirements, and a flood of new companies entered the market. These new apps and companies had problems at first, but I currently use RideAustin (a non-profit, mind you) frequently, and despite being slightly more expensive than Uber is currently, the experience is pretty much indistinguishable.
Is that actually legal, in light of [1]?
[1] https://en.wikipedia.org/wiki/Predatory_pricing