by Ken Task.
When you say .... 'present on windows azure virtual machinge' ... is the guest operating system Windows or Linux?
Can't speak to windows, but can for Linux .... and the 'cloud storage' could be Google.
It would mean installing special software to create a mount point (a remote file system) that appears to the local host as a partition or 'extra space' - in Windoz terms, a drive D:? Then, in config of auto backups, use 'designated area' and point to the mount point on local system.
BTW, it will be slower if locally hosted moodle and the mount point in the cloud - thus making autobackups run longer. Even to the point where 1000 courses (if they fit the criteria for qualification for backing up) could take over night .... 6 hours to complete. Of course, IF the moodle is remotely hosted ... say on Amazon ... and your extra storage is also on Amazon ... then that's fewer hops away from the source (the Moodle server itself) and thus should take less time.
Bottom line there ... networking layer is involved. If network hickups and the mount point is broken, your autobackups aren't working.
'spirit of sharing', Ken