[VMC] Snapshot creation fails with error "Object policy is not compatible with datastore space efficiency policy configured on the cluster"

Products

• VMware Cloud on AWS

Issue/Introduction

• Snapshot creations during VM backup fails with the below error:

  Object policy is not compatible with datastore space efficiency policy configured on the cluster. An error occurred while taking a snapshot: 22 (Invalid argument).
  

• VM Power On operation fail with error:
  

  Module VMMon power on failed. Failed to start the virtual machine. Failed to power on VM. Could not power on virtual machine: Failure. Failed to create swap file

• vMotion of the VM fails with error:
  

  A general system error occurred: Launch failure 2025-10-14T03:22:19.970158Z The VM failed to resume on the destination during early power on. Module VMMon power on failed. Cause: Module VMMon power on failed. 2025-10-14T03:22:19.970158Z The VM failed to resume on the destination during early power on.

• The issue started after a new ESXi host was added to the Cluster during a planned maintenance or after an unplanned host failure.
  
  

Environment

VMware Cloud on AWS

Cause

• This is a known issue caused by a race condition in the vSAN clomd module, when the vSAN Witness host's disks are marked as having Deduplication Disabled but not tagged as Witness disks which do not store data.
• Due to the vSAN Storage Policy having "Space efficiency" set to "Deduplication and Compression", the incompatibility error is thrown and vswp file creation fails. 

Resolution

• Restarting vSAN CLOMD service on all hosts in the Cluster is a valid work-around.  To perform this action on a VMC on AWS SDDC environment, please engage VMC on AWS Support. 
• A permanent fix would be available in a future version.