Do you think this is worse than having it all in one cloud provider?

The number of providers doesn't matter, actually. It could be just one, as long as it is easy to switch whenever you need. See GitHub.

Sadly this will be true for 95% of the storage

It seems to me that an API intended to make this storage a commodity would lower the barrier to entry, possibly increasing the natural number of participants in the market.

Don't worry, these competitors will host their service on one of these providers

Is that a big problem if data is end-to-end encrypted?

Cynicism like this makes its own truth each time it's repeated.