It's not just about downtime, but also about not getting your systems hacked, not losing your data if sh1t hits the fan, regulation compliance, flexibility (e.g. ability to quickly spin-out new test envs) etc.
My preferred solution to this problem is different, though. For most businesses, apps, a monolith (maybe with a few extra services) + 1 relational DB is all you need. In such a simple setup, many of the problems faced either disappear or get much smaller.
The only systems I have ever seen get compromised firsthand were in public clouds and because they were in public clouds. Most of my career has been at shops that, for one reason or another, primarily own their own infrastructure, cloud represents a rather small fraction. It's far easier to secure a few servers behind a firewall than figure out the Rube Goldberg Machine that is cloud configuration.
> not losing your data if sh1t hits the fan
You can use off-site backup without using cloud systems, you know? Backblaze, AWS Glacier, etc. are all pretty reasonable solutions. Most of the time when I've seen the need to exercise the backup strategy it's because of some software fuckup, not something like a disk dying. Using a managed database isn't going to save you when the intern TRUNCATEs the prod database on accident (and if something like that happens, it means you fucked up elsewhere).
> regulation compliance
Most shops would be way better suited to paying a payment processor like Stripe, or other equivalent vendors for similarly protected data. Defense is a whole can of worms, "government clouds" are a scam that make you more vulnerable to an unauthorized export than less.
> flexibility (e.g. ability to quickly spin-out new test envs) etc.
You actually lose flexibility by buying into a particular cloud provider, not gain it. Some things become easier, but many things become harder. Also, IME the hard part of creating reasonable test envs is configuring your edge (ingress, logging infra) and data.
My preferred solution to this problem is different, though. For most businesses, apps, a monolith (maybe with a few extra services) + 1 relational DB is all you need. In such a simple setup, many of the problems faced either disappear or get much smaller.