By having a guarantee of only 1 instance (or any specified max number of instances) we as customers can ensure that our budget isn't suddenly eaten away by spikes of lots of instances being spawned. One potential problem is of course that the application can become extremely slow resulting in a really bad end-user experience. I think Google should be generous and have unlimited free instances. Google will still make a lot of money on the quotas. AND, that will make GAE super competitive. AND, then it would not be a problem with the instances being opaque and Google would be free to adjust the instances as they see fit.
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