The last sentence: However I think lots of management might prefer in-house infrastructure for a simple reason: it gives them a specific neck to choke, and possibly replace, when things go wrong.

That may be true for some companies, but I've also seen the opposite: it's easier to put the blame on a third party because it looks like it frees managers from the duty to solve the problems. If SLA's are defined it's also easier to explain why you bash a service supplier or not.