It's both because they also weren't paying drivers enough to cover their (actual) costs.

That doesn't make sense. If the drivers were operating at a loss they were subsidizing Uber, not the other way around.

No, these can both be true. Uber can charge users less than they pay the drivers (losing money on rides) while still paying drivers less than the drivers' total costs. Like if I take an Uber somewhere, Uber charges me $10, pays the driver $15, and the driver's actual costs are $20 (gas, wear/tear, whatever.)

Not saying whether or not this actually happened, only that it's mathematically totally possible.