The cloud can operate as a dumb TURN relay relaying E2E-encrypted traffic. Then the worst the cloud can do is deny service to remote management (and even then, local management would still work), but it wouldn't be able to send direct control commands to the equipment since they don't have the authentication nor encryption keys.
This also makes it simpler from a programming point of view - instead of having separate cloud sync & local control protocols, you just have one local protocol and you merely tunnel it through the (dumb) cloud if you can't connect directly.
It could, but this requires to store historical data about usage on devices. If you store that encrypted data in cloud, then getting it to your mobile phone is super slow. If you store it in cloud, you can get historical data even if your device is dead or has 256 BYTES of memory and 1 megabit of flash storage. We have such devices, very effective at managing local municipal heating network and controlling several thermal controllers each via rs232 or rs485. Fortunately we preemptively moved everything into VPN'ed mobile network, we need special approval to touch anything on that network and can't connect without them granting access, so after EU started moving with cybersecurity this year, we are covered.
> This also makes it simpler from a programming point of view - instead of having separate cloud sync & local control protocols, you just have one local protocol and you merely tunnel it through the (dumb) cloud if you can't connect directly.
Having only cloud protocol is even simpler, I've done all of the above (I do backend and our firmwares).
We consider "they hacked the mobile network VPN's AND had time to reverse our protocol before being booted out of network" as too high a level to be resolved by us. If someone has enough resources to do this, he will also just hack into standard-level secured server at municipal office and there will probably be no one there to stop him or discover what went wrong.
I don't think E2E is simpler to program if you want to get it right. There are entire companies whose raison d'être is actually managing keys properly (e.g. Signal, Tailscale).
This should be the basic model. A fully third party TURN service. You pay $20/mo to keep your home connected, and all devices and providers can use a standard protocol, and users remain fully in control of their data.
This also makes it simpler from a programming point of view - instead of having separate cloud sync & local control protocols, you just have one local protocol and you merely tunnel it through the (dumb) cloud if you can't connect directly.