If a video game publisher sells a game for Mac and Windows, and one of those platforms doesn't work, then the affected customer is entitled either to customer support or a refund. The advertised product (native client on a certain platform) isn't working as advertised.
If the desktop client is failing, then he's not getting what is promised "on the box" (or in the feature set advertised on google.com).
They sell that client pretty hard btw: https://support.google.com/a/answer/2490101?hl=en
To use the full power of Google Drive, you should install Google Drive for Mac/PC, a desktop sync client. This synchronizes any or all your files to Google Drive on the web, making them available anywhere, at any time, on any device. It also provides secure, cloud-based storage for your files.
The issue isn't so much as the client is failing - but that it wasn't designed to handle their edge-case - and trying to sync 700,000+ items, or 700GB worth of files to your desktop is definitely at the edges.
Other desktop sync clients (e.g. Box.net or Dropbox) exhibit similar performance characteristics - e.g. Dropbox advertise a limit of around 300,000 files (https://www.dropbox.com/help/space/file-storage-limit). So this isn't something specific to us.
For us, I know there isn't a hard limit per se, but there are memory limitations, due to this being a 32-bit binary. So things like the user's environment, and the length of certain fields could also play a factor.
However, it is something that I know several smart people are chipping away at steadily - in fact, there's a new "Backup and Sync client" we announced a month or so ago, which is launching any day now. It's basically Drive Sync Client 2.0.
If the client allows you do do something, and you do it, and it causes the client to break, that is 100% a "failure"