They’ve taken the application level approach (Python currently).

And unlike Sun’s attempt (which also needed porting of app to a platform instead of the looser requirements of EC2 style), there is an interesting entry incentive:

“It’s free to get started. Every Google App Engine application can use up to 500MB of persistent storage and enough bandwidth and CPU for 5 million monthly page views.”

http://code.google.com/appengine/

http://code.google.com/appengine/docs/whatisgoogleappengine.html

http://googleappengine.blogspot.com/2008/04/introducing-google-app-engine-our-new.html

http://appgallery.appspot.com/

http://groups.google.com/group/google-appengine