1. Loss leading is not dumping.
2. Plenty of competitors in the storage space are still thriving including Dropbox, Box, Microsoft OneDrive, Backblaze, Amazon Drive, Apple iCloud, etc.
3. There's even more more competition on the photo sharing side of things like Instagram, Flickr, SmugMug, 500px, imgur, imageshack, Facebook, 1x, photoblog, etc.
4. Photos isn't even the largest service nor Google the most influential player in either sector.