The DafDigest on Sotah 49a cites this Gemara and cites two different approaches. Approach 1 is that of the Maharik:
Maharik writes that there is no source that a grandchild is obligated to honor a grandparent and the Gemara in Yevamos that states that grandchildren are like children (בני בנים הרי הם כבנים) refers only to the mitzvah of פרו ורבו i.e. a grandparent is credited with the mitzvah of פרו ורבו if he leaves behind grandchildren even if he does not leave behind children.
Approach 2 is that of the Yad Avraham on the Shulchan Aruch:
Yad Avrohom in his commentary to Shulchan Aruch notes that our Gemara is not a definitive proof that a grandson is not obligated to honor his grandfather because a distinction could be made between a maternal grandfather and a paternal grandfather. Basing himself on a Midrash he entertains the possibility that a grandson is not obligated to honor a maternal grandfather but is obligated to honor a paternal grandfather.
The Sefer Charedim however, maintains that grandchildren are like children, and thus, the obligation of Kibbud Av Va-em applies here.
The Steinsaltz on this Gemara seems to echoe the commentary of the Yad Avraham.
In the case of this Gemara, "Rav Acha bar Yaakov reared Rav Yaakov, his daughter's son", the commentary of the approach of the Yad Avraham seems to apply, "a grandson is not obligated to honor a maternal grandfather".