I don't think that would happen. S3 is already at a competitive advantage in same region due to the absence of data transfer costs you typically pay.
I'd be more interested if Blackblaze purchased several 10gig links per region to AWS under an arrangement like DirectConnect, or had alternative direct peering with AWS removing transit and peering exchange risks. I dont think current DirectConnect is compatible with this though as it seems Blackblaze would have to swallow all the traffic costs for every customer. I could be wrong though...
I'd be more interested if Blackblaze purchased several 10gig links per region to AWS under an arrangement like DirectConnect, or had alternative direct peering with AWS removing transit and peering exchange risks. I dont think current DirectConnect is compatible with this though as it seems Blackblaze would have to swallow all the traffic costs for every customer. I could be wrong though...