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It takes about 24 hours to release storage but much better than deleted objects being retained for ever by default. Though it took a while for them to confirm this, I've been using B2 storage with Veeam like this for a while now with no issues. Just a followup comment that I finally got confirmation from backblaze that their initial recommendation is not right, and setting life cycle policy to "keep only the last version" is required to recover storage after Veeam Backup deletes objects. MultCloud supports more than 30 major cloud services such as Google Drive, Dropbox, Backblaze, Amazon S3, OneDrive, SharePoint, Wasabi, Google Photos, Box, etc., which not only allows users to manage data from different clouds in one place, but also helps you easily backup files from cloud to cloud. This makes little sense unless they expect Veeam to control lifecycle or delete files by specifying versions. But backblaze support insists on leaving the lifecycle rule at its default saying it doesn't do anything unless an explicit rule is added - but their "do nothing" seems to mean keep all versions. I tested using S3 API to create and delete a files and see the same behaviour - on deletion a new hidden file with zero size appears and old one is retained as previous version. Right, that's what one would think based on their default settings (keep all versions).
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