I suspect a number of the Cloud providers already peer with each other. Amazon, Google and Facebook are already peering with some providers, and possibly each

I suspect a number of the Cloud providers already peer with each other. Amazon, Google and Facebook are already peering with some providers, and possibly each other. Of those, I believe Google has way more peering partners than anyone. Mosso's tough because Rackspace does everything over purchased transit, they don't really peer with anyone. Simple peering isn't going to fix the latency problems, though. The solution is latency tolerant applications. There are numerous ways to help apps be resilient to latency. Things like datacenter local write through caches, the multi-master replication that's easier with newer datastores (CouchDB for instance) than traditional databases, etc. The real latency problems happen between your assembled bits and your users. Creative CDN use can help with this, and I expect that we'll see much smarter CDNs in the future that offer some of what Akamai does without requiring payments in live kidneys.