This was a paid service until Google changed the terms; afterwards, Google claimed that the files would merely be read only (indefinitely), not deleted. After THAT, they then gave the user 1 week to deal with 250 terabytes.
Read it again you understand that properly.
Does it say somewhere in terms and conditions?
If Google unilaterally changed its TOS and updated those terms by saying the account would go 'into a read only state' without any further details (both of which in fact happened), the user is entitled to assume that such a read only state will be the new status quo. Google should have specified a time limit or specified that the read only state would be revocable on with no or short notice, at the company's discretion. By staying silent on that matter, Google's communications were misleading or deceptive or likely to mislead or deceive the user of the product.
This really isn't rocket science.
How much would a TB cost on S3?
It is able to provide services very cheaply and it is for that very reason that paying customers are attracted to it - and of course, even if a service is cheap, paying for a service creates a different relationship between the service provider and the customer than does a relationship where the customer freeloads. In my view, if this had been a free service the terms of which had changed, there wouldn't be the same scope for outrage. But this was a paying customer, even if he didn't pay as much as you think would have been reasonable - or would have been obtained - elsewhere in the market. Google voluntarily chose those prices for its unlimited plan for competitive reasons and in its own corporate interests. That's on Google, as was Google's subsequent unconscionable behaviour.
In Australia, I suspect this sort of behaviour would provoke very close scrutiny by our antitrust and consumer protection regular, the ACCC. We don't seem to have the same problem with regulatory capture that the US does currently. At the very least here the consumer would have arguable claims under the Australian Consumer Law relating to consumer guarantees and misleading and deceptive conduct in trade or commerce.