> And, the political reputation
> damage would be enough to drive even more people away from their
> product.
>

Google already set up their China search site google.cn that received
approval from the Chinese government.

Did you see any resulting "political reputation damage" that "drive
even more people away from their product"?

Last I checked Google got more and more dominant in search every
month, so obviously nobody cared that Google worked with the Chinese
government on their search engine. Doing the same thing with App
Engine wouldn't be any different. Hence your "political reputation"
argument is specious.
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