This is a little nuanced. If we're talking about a cloud VM that you, personally, have root on, then indeed the software you choose to put on it can be consider

This is a little nuanced. If we're talking about a cloud VM that you, personally, have root on, then indeed the software you choose to put on it can be considered free software (if you alone are the user). However, that software is not a service - the infrastructure that allows you to run it is the service (and obviously not free, although you're probably fine with that). But that changes if you publish an interface to the software on your cloud machine, and allow others to use it. Now it's a "service" and that software is no longer free, because you have denied the four freedoms to its users. Software as a service cannot be free software - it is a fundamental contradiction.