Phone-based GPS, really?! They probably should be taken to task by weights and measures.
But why is Uber even metering the trip distance? If they incorporated the destination address to the booking, they could calculate an exact price based on time of day/projected congestion/etc. Then they'd have even better consumer protection than a taxi cab (where the driver still has an incentive to go a more expensive route).
They know your start location because you call them there. They use GPS to determine your end location, to save time.
Uber doesn't really even publish a rate schedule for how much you pay, and it doesn't have stable prices. They go up during periods of high demand, for example. So it's unclear why you'd object to the GPS, except to mess with them; you don't know what you're going to pay in any case.
So make the destination address optional while booking, and if given you'll get an exact price ahead of time. This doesn't exactly conflict with demand pricing either - Uber just has to be a bit smarter ahead of time.
The fundamental problem is "you don't know what you're going to pay", and I'm not surprised they're being called out for that under consumer protection laws. The point of taxi regulation is to prevent people from being cheated on the spot. Uber is in a position to do even better than what regulations are capable of, with market pricing, and they should aim for that.
They meter the trip distance because the faster route may be a lot longer. Charging based on "crow flies" distance would align driver and rider interests, but for those "can't get there from here" destinations, the drivers would be underpaid and perhaps more reluctant to accept the fare.
But why is Uber even metering the trip distance? If they incorporated the destination address to the booking, they could calculate an exact price based on time of day/projected congestion/etc. Then they'd have even better consumer protection than a taxi cab (where the driver still has an incentive to go a more expensive route).