Jonas if you're still having this issue. I was able to fix this by 
modifying the *backend/backend.iml *

*Change:*
<option name="WAR_DIR" value="$MODULE_DIR$/build/exploded-app" />

To:

<option name="WAR_DIR" value="$MODULE_DIR$/build/exploded-backend" />



On Thursday, May 25, 2017 at 7:16:18 PM UTC-7, Jonas Hartmann wrote:
>
> Via Android Studio -> Build -> Deploy Module to App Engine...
>
>
> On Friday, May 26, 2017 at 3:07:28 AM UTC+8, appu wrote:
>>
>> @Jonas, downgrading seems like a sub-optimal solution for all of us. How 
>> are you doing deploys?
>>
>> On Wednesday, May 24, 2017 at 9:38:23 PM UTC-4, Jonas Hartmann wrote:
>>>
>>> I've downgraded to com.google.cloud.tools:appengine-gradle-plugin:1.1.1 and 
>>> it works again.
>>>
>>> It's not clear what the user is doing here. 
>>>>
>>>
>>> I've basically upgraded to Cloud Endpoints Frameworks v2.0 Gradle client 
>>> library generation plugins with Cloud Endpoints Frameworks v1.0 as 
>>> explained in following repo: 
>>> https://github.com/GoogleCloudPlatform/java-docs-samples/tree/master/appengine/endpoints-frameworks-v2/migration-example
>>>
>>

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