I think point 2 is the key. There likely will be increased competition once some of the initial regulatory battles have been fought. Having a lock on that premium market segment should allow them to be very competitive in a taxi-like market as well (They can afford to have really low margins on much of that market, where as their competitors won't).

There's really two parts to the business model. It's a balance between making sure drivers are making enough money for it to be worth their time/effort and ensuring that it's a pleasant experience for riders.