Spot on. We iterated on a similar product in this space: "privacy preserving", "self-hosted", "open source" etc. But focused on local AI indexing & search of personal videos and photos [0], rather than backups.
We ultimately shelved VideoNinja because we weren't able to find a sustainable business angle:
* Non-technical people simply don't care (happy locked into Apple / Google).
* Technical people understood the proposition, but are super stingy. Case in point, see the responses in this very thread: "$10 per year max; I can buy a HDD for less!". That's one (cheap) restaurant meal per year.
So I fully understand your decision to go "cloud". Although that immediately takes your product off the table for me personally. I want nothing of mine (of value) in the cloud.
I feel there must be a way to square that circle, the market exists.