Sounds like even worse deal for the customer since there is no refund

Depends on the service are

I have some services which can cope with a 98.5% downtime, as long as they are available the specific 1.5% of the time we need them to run, as such "the cloud" is useless for that service

Right when you really want your thing to be up and can’t amortize hours of continuous downtime cloud has no solution for this. That’s something that often gets left out from the sales pitches tho =)