Uber is affordable mostly for short distances. For more the 10 miles or so, uber like any other taxi service starts to get expensive. So yes, Uber competes with public transportation. In certain categories like short distance Uber has an advantage. But in longer distance, public transportation has an advantage.
Uber's main trick has been claiming it's not a taxi service, and that its drivers aren't employees. Kind of like Airbnb claiming it's not a hotel service. Or Paypal when they used to claim they weren't a bank. Or cable/internet phone companies claiming they're not phone companies. Or game companies claiming that buying loot boxes isn't gambling.
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Economic sustainability - Most sustainable form of subsidized mobility
Improve urban living - Reduce congestion / improve mobility in urbanized areas
Uber may be able to get close to #1 by burning more and more VC / IPO $$, but 2 and 3 are much harder for them to reconcile.