The government (at least where I am) is not going to crack-down on Uber in the way you describe. You left out one other option, which is that the passenger livery laws will become more lax in order to find a compromise that allows companies like Uber to exist and compete. The service is too popular to do away with, if you get rid of it, you look like you are abusing the wants and needs of the general populace.
I live in a notably large US city with very shitty public transportation options for a large number of neighborhoods and destinations. Cabs have always been extremely overpriced (not the drivers' fault, but due to the monopoloy on the medallions), and the ride was typically a crapshoot between being the most disgusting experience of your life, to being a basic ride somewhere. The presence of Uber fixed a lot of that. Not to mention helping dismantle some of a very old, very bribed, bought, and paid for power structure that did nothing to help the public, or the cab drivers, and never wanted to embrace any new technology.
While the system is not perfect, it would be extremely difficult for my town to get rid of uber at this point...especially in the wake of other online/phone-based services that purport to be 'free' that would simply crop up in its place. Fortunately my town understands this and has worked heavily with Uber and Lyft to make compromises.