That's correct. It's legalese for an almost tautological statement: "we are allowed to do what you tell us to do with your photos." We take privacy seriously.

It effectively gives them the right to use your photos however they please.

No, that's not true. It only gives us the rights to (a) display your photos to you and those with whom you share them, (b) auto-organize your photos for you, and (c) delete photos stored on our serivce (when you click delete photo or delete source or delete your account).

We can't (and don't want to) use your photos commercially, browse through your photos, distribute them to people you haven't authorized to see them, turn them into ads, etc. And we've never had any sort of government request to access an account.