Cannibalism, pecking orders resulting in serious injuring and killing of other birds, reduced production, easier and faster spread of disease. Animal welfare activists also want to ban debeaking, which will actually make these situations worse than what they already are. Free range is not necessarily a better alternative, and there have been studies showing that stress rates are higher in free range birds than caged birds.
It is just never that black and white. People want good animal ethics, I do too, but the majority also don't want to pay the high prices for the alternatives to current systems. Sometimes the alternatives are not always better either.