I've commented elsewhere, and I'll comment here again: Cloudflare R2 is really a re-packaging / re-positioning of how most customers were using Cloudflare's CDN in the first place: As a low-cost content delivery network. As a small tech shop, we front S3 with Cloudflare (not CloudFront, because it's relatively expensive) for binary downloads, and pay single digit $ to AWS and $0 to Cloudflare. If we were pushing blobs through S3 + accelerated buckets; or S3 + CloudFront; or S3 + transfer-acceleration, our AWS bill would have been 3x / 5x.
Relying on Cloudflare to do tiered-caching / transfer-acceleration afforded by tight integration between its CDN and R2 would lead us to drop S3 altogether for our workloads.
We've also experimented using Workers KV as a blob store (it has a cap of 25MB per key; costs $5 per million writes, $0.5 per million reads; $5 per 10GB of storage; zero egress fee) and its pricing comes out cheaper than S3. We'd have moved to KV already if R2 hadn't been announced. Now, we think it is prudent to bide our time till R2 goes public.
But: we are a rather tiny tech shop and agonize over bill items like egress; most enterprises worry more about data security, compliance, and integration with big-data tools (like EMR, Athena, Firehose, RedShift etc). So, I am not sure if there'd be an exodus off-the-bat (at least not until Cloudflare has equivalent integrations / services in-place [0]). Though, I can see why companies like smugmug (who have been using S3 since 2006!) may move.
The killer here is, R2 will sweep away dev shops at the low-end of the market. If anyone's starting a bootstrapped SaaS company, not only does Cloudflare becomes the place for them to prototype a MVP (as opposed to AWS/Azure/GCP) but also an integration point for their offerings (consider: a Tableau competitor + R2) [1]. As noted by Ben Thompson a few days ago, there's little AWS can do despite knowing what's in store, other than cannibalize their own business (which they're not afraid to do!) [2]. We are entering uncharted waters here: Two companies fully drowning in HBS credos going after each other. Wonder what Clayton Christensen would have thought of that.
[0] https://en.wikipedia.org/wiki/Complex_contagion
[1] https://en.wikipedia.org/wiki/Scale-free_network
[2] https://stratechery.com/2021/cloudflares-disruption/