PS's dominance is certainly in part due to piracy, there's absolutely no question about it. And piracy drives sales as I pointed out earlier. It might not be right, but that's how things are.
Being in a dominant position gives Adobe room to exploit that, and that's exactly what we're seeing with this policy (also see what's happening in screen calibration space). Fortunately they are not a monopoly, and there are viable alternatives in the horizon even for pro use (not so much in screen calibration).
Stricter upgrade policies, price increases, and harder-to-pirate software makes it less attractive to potential end users. As a result, Adobe's competition will work harder and harder to capture the sales of people who can't afford the more expensive PS, won't adopt new license and upgrade policies, or find pirating too much of a hassle. This in turn results in Adobe needing to capture more margin, which likely means even higher prices in the medium-long term*.
What I'm essentially saying is that Adobe's stricter upgrade policies, expected price increases, and move to the cloud to crack down on piracy are hurting their market share and their bottom line. I'm glad I don't own their stock.
Again, I'm not making any judgment calls about right or wrong, just an assessment of how the market is.
* Please note that higher price does not necessarily mean higher profit. Adobe could conceivably sell PS for less (smaller margins), while getting more profit due to increased number of sold units. They are essentially doing it already by selling PS Elements - the technical term is price discrimination. The problem with this is that tougher competition due to upgrade policies and piracy will make selling more units tougher.