The SEC's obligation is to all market participants, not just index fund holders.

And denying market participant's ability to invest or short one of the most important companies in the world would be malpractice

Arguably if you consciously choose to invest on a stock there should be no protection or obstacle other than regulated controls. For indices I see the point of extra protection. Where it gets murky is when you look at retirement funds, where you still have no control, but that should be regulation on the funds themselves rather than the stock.