I'm not seeing why not. Your data center could go down for a myriad of reasons (ISP goes down, HDs, tripping on power cable, etc). If that happens you're pretty much screwed. You could compensate by having multiple data centers with different infrastructure providers. If you do, you're probably spending more than the few K you referenced in your post.

Yes, it's bad that apparently all of the regions failed. Google will hear about it. People will get in trouble. But a screw up at this level is rare. If you use cloud, or even a VPS provider like Linode, you get auto-fail over and someone that is contractually obligated to deal with failures.