The Walmart Strategy

The key paragraph from this Dallas Uber driver revolt story:

The experience of the Dallas UberBlack drivers is telling. When Uber entered Dallas in 2012, many of the drivers were either independent hired-car operators or contractors for limousine companies who bought or leased their own cars...
The drivers formed a tactical alliance with the company to help it gain the city's approval, which local cab operators resisted.
But the relationship began to sour in 2014, when the company decreed that drivers with cars made before 2008 would no longer be able to participate in UberBlack...
By the time Uber handed down its UberX directive in September, the drivers had long since recognized that they were at the company's beck and call. Because of Uber's popularity, almost all their other sources of business had dried up. And Uber had earned the imprimatur of the City Council, which made the drivers politically expendable, too.

So the story goes use non-cab drivers to champion your illegal/non-regulatory entry into a market with policymakers. In turn, the start up's success eliminates all of the competition. When Uber's pricing power is near monopolistic, it starts in on the former champions now current drivers - who have no recourse since all the no alternative options have been driven from the market.

It's a similar refrain to Walmart's low-cost producers. They are enticed into agreements with Walmart by the allure of massive selling volume. Walmart insists on razor thin margins for whatever product is being provided. In order to provide the sheer amount of product, a company foregoes all other customers and focuses exclusively on its Walmart account. As the sole customer, Walmart then insists on even lower prices, which the vendor has to accede to since they don't have any other customers and have increased investments in ever larger capacities.