Backblaze offers 'unlimited' backup space, so they have to do this kind of thing as a result of that poor marketing choice.

If they must scam, shouldn’t they be deduplicating on the server rather than the client?

No they don’t. They just have to price the product to reflect changing user patterns. When backblaze started, it was simply “we back up all the files on your drive” they didn’t even have a restore feature that was your job when you needed it. Over time they realized some user behavior changed, these Cloud drives where a huge data source they hadn’t priced in, git gave them some problems that they didn’t factor in, etc. The issue is there solution to dealing with it is to exclude it and that means they’re now a half baked solution to many of their users, they should have just changed the pricing and supported the backup solution people need today.