Yes, that is partially true. However, the major reason is safety and liability. I have spent quite a bit of time overseas, and jumping in some random car of questionable roadworthiness, with an equally questionable driver, is not really something that the average citizen should have to deal with on a regular basis. If you don't want hotels or taxis regulated, then perhaps the same could be said for all businesses, and housing (construction regulations), etc. If that is the case, then please be sure to be in Iran or Afghanistan the next time there is a major earthquake, and then tell me that regulation is about the "cartels who control entry into the market".
