It works through Arc2Earths cloud service. Frankly I cant see anyone hosting their own GIS serviers within a year or two – it will all be done through the cloud.
What about OS derived data (i.e. all local government data) on a hosted service? Confusion still rein but with the data not hosted by google but by yourself through a third party could provider it would seem to reduce the issues. See the linked discussion on Ed Parsons blog.