You should probably be asking what differentiates it from a video file. GIF is horrible - it's limited to 256 colors, and it sucks at compression compared to MP4, let alone HEVC.
Now try to save a gif on Twitter without resorting to scripts or developer tools. Try to right click and save an Imgur gifv, then upload that back to imgur again.
GIFs are simple. You save an image file. You're done. Video is complex. You can't just have an mp4 (well, x264) file because that's patent-troubled. You can't just have a webm file because that's not supported by Apple devices.
Even these live photos are difficult. You need to add Apple JavaScript to your page, and the live photos themselves are made up of two files:
>Your Live Photo will be stored as a pair of files: a JPG file and a MOV file.
Yeah, GIF itself is a bad format, but simplicity is why it's still around.
This was true of gif until the mid 2000s, well after it became popular.
Is it still around? Vast majority of "GIFs" from gfycat and imgur are now served as MP4. I rarely encounter GIFs anymore.
However I don't think apple ever intended Live Photos to be a replacement for gifs. They're just a fun little feature that works well within the context of taking photos with a cell camera.
Respectfully, I don't think Apple makes fun little business decisions either.
There are lots of fun little features in iOS.