You may argue the model can regress to essentially taxis. But realize that taxis work due to artificial supply side restrictions generally using a medallion system and strict limits on numbers. This is fundamentally different from Uber where there is basically no restriction on supply.
But I think in the case of Uber it’s beyond debate that drivers, as an overall class, are not better off “having the freedom” to work under Uber’s (or other firm’s) poor conditions.
I’d say the same thing of Amazon warehouse workers too.
The conditions of these employment agreements should become legally not possible, so that workers don’t become effectively indentured servants to a working agreement that makes them worse off than some societally agreed standard, and feeling trapped and having the bad working conditions create a feedback mechanism bu which they can’t realistically choose to stop that working agreement and seek betterment.
These examples, in American standards, are egregious, nowhere close to any boundary where the government is asking unreasonable concessions of Uber.
If meeting these conditions doesn’t allow Uber to remain financially solvent, then Uber is not and never was a business, only a scam.
If better jobs existed, drivers could go there now. If any company can fulfill these regulations, I would expect it to be companies that already have market share like Lyft and Uber. If they choose to shut down because they can't meet these regulations and be viable businesses, then I'm not really optimistic about your other argument either. Personally, I'd be even less likely than ever to try and do (or invest in) an Uber-like startup after this decision.
This same faulty argument is made often to argue you shouldn’t reduce exploitative child or sex labor, especially in developing countries, but it’s not valid.
If Uber employment option is exploitative, you cannot use drivers’ own willingness to accept work via that platform as some tacit endorsement that “consenting adults” are each ok with the arrangement, because the exploitative nature creates a duress / desperation aspect that means you can’t differentiate between drivers who are fully aware of the situation they are agreeing to and are happy to do it vs people who were banking on Uber being very different and now find themselves underwater on a car loan and not making enough for health insurance and thus unable to stop driving and look for other work because of a nasty feedback loop or reinforcing problems.
Part of a governments job is to set up rules whereby such a situation cannot be entered into in the first place, given that by doing so you become stuck in it under duress (eg not having health insurance, paid rest periods, etc.).