Happened to us in AUS Rway 17R on a short final in a CRJ-900.
We were cleared to land; Southwest 73 was holding short off 17R and called in that they were ready to go. Tower cleared 73 for takeoff without even mentioning that ‘plane on [mileage] final; Southwest boys/girls apparently NEVER even looked at the final otherwise they wouldn’t have pulled on the runway (or may be they would’ve).
We couldn’t believe it. We initiated a go around and it was at least few seconds before the tower realized what happened and simply told us to turn right heading 190. Unbelievable!
It seems that in AUS, tower/ground would do whatever they could to help Southwest get out of there by allowing them to cut everyone and go in front. We once waited for TO on 17R at the beginning of runway and they had us hold for five minutes because the SW 73 was taxiing in and was allowed to TO at G. We saw a massive dust bowl rise in the air at the end of runway 17R with an almost abrupt ‘liftoff’.
Oh well. Always watch and decided for yourselves if it’s OK to move on to the runway or when landing, make sure no one’s on it.