The use of AWS S3 storage to store SQL Server backups makes sense, firstly it is significantly cheaper than EBS, secondly you can encrypt what’s stored and thirdly you can manage backup file retention and lifecycle using inbuilt functionality.
I recently read the SQL Server Blog article Data-intensive Applications in the Cloud Computing World by Mark Souza, General Manager, Windows Azure Customer Advisory Team and it really drove home the concept that moving applications into the Cloud is not just about moving an application and related database to respective virtual
Consider the following situation, you create a database backup on a AWS virtual machine EBS disk and then move the backup file to Blob storage e.g. S3. However, you have switch on the Encryption option for your S3 storage. Is your database backup file fully protected? Yes, well, sort of.