They may very well have validated and promised it when they made sure people knew you could choose your own gender / genitalia and make transexual characters, to be honest...
As for photo mode and genitalia, well... They are the company that made collectible cards for each "conquest" of Geralt in Witcher 1. Which is, at least to me, far worse than a straight on displayed genitalia. And well, other games have shown genitalias, with mechanics that made them unavoidable to see, unless the options was turned off for the server - Conan Exiles is by no mean a real AAA game, sure, but it didn't bat an eye when it came to nudity. And try avoiding that special part of the body when you are climbing a cliff, aiming up to see where you're going
Bear with me, I see your point, I just think it's silly. Which really is the best adjective for the whole thing : silly. It's absolutely silly they would go and remove that.
Also, if children were still present in photomode, I'd understand, to some extent, the issue at hand. But they are actually removed, so ...
Yeah, silly.