You know how costco deeply subsidizes it's chicken and hotdog to incentivize people to use them?

That's how. Not every single thing you offer needs to be profitable. Losing money on some stuff is worth it if it increases brand loyalty.

Definitely not with ads, sorry if it came across like that. I meant that Google Photos (as a product) already got me to stay logged in to my Google account. So it can be a driver for Google account usage. The sharing features may be useful to get other people to sign up for Google (and Google storage for other things).

I used to run a free site that had a lot of users, and I mostly kept it up and running because I placed ads for my other (paid) SaaS services on it, and it converted like crazy. So my ideal scenario for Google would be to have a few of those launching pad products, where they show we can trust them on their word (and with our data), and that makes me want to invest more in the wider brand (buy a Pixel phone, get Google Home devices, Chromecast, etc.)