Earlier quoted context omitted.
The direction is opposite IMO. As you grow bigger on prem starts making a lot more sense.
I think the case is for big companies that have a hard time attracting IT talent. Like, not in an even remotely IT-related industry, and their headquarters is in a city with no significant tech community. Places that scream "working here will not improve your resume". I'm a major cloud skeptic, but there's a certain class of giant enterprisey companies that are never going to be able to attract good IT talent, and if…
Even larger companies can work well with that model, traffic also tends to be cheap enough that you can spread across different vendors to avoid lock-in. And in that case, your sysadmins can sit wherever they want, no need to be physically close to the servers.
Also, as there's much less knowledge to be a dedicated server provider, competition is strong and prices are comparably low.