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As far as I can tell this is just for App Engine stuff, with APIs for Python and Java. They could have opened it up to the web with REST APIs or something similar. Am I wrong?

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Wouldn't the latency be a huge issue?

Only as much of an issue as with other database hosts? (ie. not much of an issue at all)

Depends on the use. Plenty of systems have a local memory cache and queries database only for large chunks of data.

What stops you from writing a GAE app to do just that? There's papers out there on how to map SQL to REST APIs, I've written a few myself.

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