You have entirely missed the last 2 decades of this happening and at a rapidly accelerating pace. I'm not sure what you think "business critical functions" are but every company outsources at least some important components that could easily put them out of business if something goes wrong, whether that's cloud servers or payroll or manufacturing supply chains, etc. It's called risk analysis and yield management and is well understood by every successful team.

When it comes to "someone else's datacenter", I think you'd be surprised at just how few companies even own a datacenter, let alone their own racks. Even the major clouds lease their own space from actual datacenter builders and operators.