@aldnorab I do not know and it is not important regarding quality of the audio file.
A "song" can be transcoded as many time as you want and no "musical" information is gonna be missed (remember we are in digital world and information means 1s and 0s)
This is assuming that you transcode among lossless formats: ALAC, FLAC, AIFF, WAV and any other: so streaming company can receive a WAV file from the majors and transcode it to FLAC as it is the most "commercial" one
The only thing that could be lost is metadata (like image, composer, group, orchestra, year, ....)
Regarding your question, I guess that they supply FLAC because is universal: can be played in almost any system and has a very good capacity for metadata. Anyway the streaming company can receive a WAV file from the majors and transcode it to FLAC as it is the most "commercial" one. But honestly, I do not know.