They don't want to 'squash lending'. They are delighted with public libraries who license books and lend out a discrete number of copies at any one time for a limited period of time. They don't like the Internet Archive version which is 'we shall upload any book we find and allow anyone to download it and keep it, forever'.
The publishers would like the IA to stop doing that. If the IA wants to keep offering things which are out of copyright or which the copyright owners aren't going to challenge, great. Go for it. This isn't an assault on the concept of a library which is what the IA is trying to pretend. It's a challenge on the IA's pretense that they are a library and not a stock of pirated books, amongst other items.
The publishers would like the IA to stop doing that. If the IA wants to keep offering things which are out of copyright or which the copyright owners aren't going to challenge, great. Go for it. This isn't an assault on the concept of a library which is what the IA is trying to pretend. It's a challenge on the IA's pretense that they are a library and not a stock of pirated books, amongst other items.