Sounds like a conspiracy theory.

If you consider a companies who might go bankrupt because a cheaper competitor undercuts them in price hiring a PR team to fight against their competitor a conspiracy theory, than call it a conspiracy theory.

I don't see the rationale for this business model.

At current prices you can only sell blood tests that screen for cancer for people who have symptoms that indicate they might have cancers. If you radically reduce the costs of the blood tests you can also start to sell the tests to people who might have risk of cancer because of DNA but who show no symptoms.

As a result the Theranos is optimized for providing tests as cheaply as possible. Of course that conflicts with the business model of the established players.

Directly selling to patients tests that they probably don't need and they have no expertise to interpret

Studies consistently show that most doctors don't have real experience to interpret tests either. They get Bayes rule wrong and Bayes rule is the key to interpreting testing results. Software that can actually calculate the right probabilities has a good chance of doing a better job. Over time it can throw in a bunch of machine learning algorithms and interpret DNA to make better judgments than doctors can.

Currently a lot of people take Vitamin supplements without actually having data about their Vitamin levels. Cheap over the counter tests would change that state of affairs. Less people who have too much iron in their blood would take iron supplements as self medication. If we move from a model where the average person on the street doesn't buy a multivitamin in the health store but buys a bunch of tests and takes vitamins if there a deficiency that would be a radical improvement over the status quo and you don't need to involve doctors for that.

I don't think that the model of health where it's about having 10 minute conversations with doctors that tell you what you should do with the limited knowledge they gained in the 10 minutes is an effective model. For myself daily measurement of my lung function gave me information that a session at the doctors office didn't because the doctor only measured my lung function on a single day. For healthy living it's important to not externalize the concern for one's own body.

That doesn't mean that it can't be valuable to talk to doctors but it doesn't have to be the only action. Plurality of approaches is valuable.

Apart from that science profits a lot from a lot of people have a lot of blood values tested and the results uploaded to the Electronic Health Records. Having more testing because tests are cheaper is very valuable for that.

That would require massive collusion between nominal competitors at a worldwide level.

That's a bit like like saying the taxi industry engaged in massive collusion because it didn't invent Uber-like software itself. An entrenched industry seldom disrupts itself.

The lab companies decided to compete only based on quality instead of competing based on price. That's their business. For clinical purposes a tiny loss of test accuracy is well worth an improvement in the price (both money and blood) by one to two orders of magnitude.

In DNA sequencing shotgun sequencing was strongly opposed because it results in lower quality data. At the same time it gave multiple orders of magnitude cheaper DNA sequencing. If the DNA sequencing industry would have operated like the blood testing industry it wouldn't have radically faster than Moore's laws price improvements. If we want immortality than we need to copy the lessons we learned from DNA sequencing to other areas in biology.

Unless they believe that they could cheat or bribe the FDA.

What makes them special? Large pharma companies tend to lose billions of dollars in valuation when a promising drug fails FDA trials -- clearly, they are unable to "cheat or bribe" the FDA.

But going back to Theranos, I believe the problem they ran into is local variance: when you analyse tiny amounts of blood, two samples from the same blood draw end up with very different measurements for some quantities of interest. You just need a larger sample and that is a big problem for Theranos.