Backblaze is quietly phasing out unlimited backups and appears to be turning away from backup customers in general. AI storage services are more profitable. This new focus illustrates how the impact of the AI hype is being felt more and more broadly.
Backblaze is increasingly turning away from backup users. The storage service was able to distinguish itself in the market by offering customers unlimited backups for a low monthly price. That is now coming to an end.
Thanks to the unlimited program, Backblaze’s cloud storage offering was very competitive. Other parties introduced restrictions years ago. That’s why Backblaze is a kind of canary in the coal mine: if AI’s hunger for IT components and infrastructure also starts to hit the cloud, the unlimited service is a logical first victim.
(Not) unlimited
That is exactly what is happening now. Under pressure from the higher profit potential of AI-oriented services, Backblaze is quietly transforming its backup service. In the user agreement, ‘unlimited’ is given a new definition, which is mostly synonymous with ‘limited’.
Backblaze hides behind vague terminology but reserves the right to ask customers to adjust their usage or even delete accounts if usage exceeds ‘typical usage patterns’.
You can only use the service unlimitedly within the limits set by Backblaze.
The company further specifies that the use of the term ‘unlimited’ may suggest that no limits apply, but that it actually means you can only use the service unlimitedly within the limits set by Backblaze. Backblaze further points out that the backup service is only intended for (personal) PCs and external media, and not for servers or data centers.
What is typical?
If you want to back up too large a volume, Backblaze will now stop you. What constitutes too large a volume, or where the limits of typical usage lie, is not defined.
However, we can make an educated guess. Data from 2021 shows the distribution of customers’ backup sizes. It shows that more than 32 percent of users backed up less than 100 GB. About 97 percent of users did not put more than 2 TB on the service. Three percent were responsible for more, with outliers in the petabyte range.
Consumption will likely have grown somewhat in recent years, but it seems unlikely that Backblaze will consider backups of more than 5 TB as typical. Where the line is drawn for the company to take action is unfortunately unclear.
Backblaze itself indicates that the average size of a backup has increased significantly in recent years. A substantial portion of users reportedly now protect several terabytes or more. That suggests the limits Backblaze applies are unlikely to be set too low, but a concrete figure is missing.
Cloud restriction
Backblaze previously tried to quietly shrink the backup volumes it handled. The company unilaterally implemented a change where files already synced with a storage service such as Dropbox or OneDrive are automatically excluded from backups. Users received no warning about this unless they combed through the changelog of their client update.
So, anyone backing up their OneDrive files to Backblaze suddenly found they no longer had a real backup. After all, synchronization is not the same as a backup. On the contrary: a problem with OneDrive synchronization could theoretically cost you files, with a backup providing the only recovery option.
Backblaze adds some nuance in response to this article. The company says the exclusion of cloud storage services is the result of a recent technical limitation. According to Backblaze, storage services no longer keep all files on a local hard drive, but instead store references to those files. That makes it complex for Backblaze to back up the actual file itself.
Because Backblaze wants to avoid backing up only those references, it chose to exclude entire folders. You can read the full explanation here. The core of that explanation is that Backblaze wants to avoid a situation where it backs up those references, customers restore their data and only find the references, and are then surprised that the files being referenced are missing.
We would note, however, that this clarification only came after the change was made, and that several customers said they were caught off guard. Backblaze acknowledges that it could have communicated more proactively on the issue and says it will actively work on that. The company also says it is looking at how it can better support the backup of synchronized data.
AI is more profitable
We can speculate about Backblaze’s motivation. Revenue from services related to AI storage provides a better profit than the backup solution. Backup is now also tucked away on its website, even though that product is what made the company’s name in the first place.
The focus is now shifting to more performance-oriented storage tailored to AI workloads. This change in focus from Backblaze is yet another setback for ordinary end customers. In the name of AI, access to budget PCs, smartphones, servers, and components was already lost. Now the first cloud service follows.
Double impact
AI attacks the status quo in two ways. On one hand, major players are using their financial resources, along with smart investments in each other, to buy up the production capacity of components. This makes it harder for the rest of the world to get components, which are rising in price. This applies not only to laptops and PCs but also to storage servers.
On the other hand, AI users have the budget to buy AI-related services. For a cloud provider, it becomes more expensive to build out storage on one hand, but on the other hand, demand is appearing, driven by AI, for more high-performance storage services for which the provider can charge a higher margin. It is not illogical that Backblaze would cut its losses in this context, impose restrictions on the low-margin service, and focus available resources on services catering to AI.
The trend continues
Hardware specialists are doing the same: memory manufacturers are using their available capacity to produce HBM instead of DRAM, because AI players want that higher-margin HBM. CPU builders are playing the same game: demand is high, so existing production capacity shifts to higher-margin components.
This trend will in all likelihood continue for a while. The question now is whether Backblaze, with its sneaky changes, will remain an exception or serve as a warning of higher prices at other cloud providers.