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wouldn't the latency of a roundtrip across the internet kill the usefulness of such db-in-the-cloud services?

I imagine its hosted on EC2, in which case, if you are too, it wouldn't matter. I imagine that if they get popular, nodes in Rackspace and a few other popular providers wouldn't be hard to do.

It is indeed hosted on EC2, and they provide you with an internal DNS name, so you can access it via EC2's internal network, which means it's pretty damn fast.

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