The argument they are making is that both parties are agreeing to traveling a certain distance for a certain price. But the tool which measures the distance must be an approved measurement device in order to prevent fraud.

I can agree to pay my super market a dollar for a pound of apples, but the dept. of weights and measures still validates the scale. That's the consumer protection that the state is arguing for.

Note the whole is it a cab or isn't it argument isn't actually germaine to this complaint (they actually dropped the unlicensed livery service complaint) its wholly based on the legitimacy of the measuring device