It has recently been uncovered that Google is blocking the use of PayPal for payments.

The Washington Post uncovered that the Google App Engine, the new platform for building and hosting 3^rd party applications, was not allowing the integration of PayPal payment handling.

The problem, as stated by the Washington Post, is that “developers who are building apps that use PayPal to handle payments usually require the application to send a request to the PayPal service. The URL’s used in these requests are all on the paypal.com domain name, and there is a test environment setup on a URL at www.sandbox.paypal.com. In Google App Engine applications, requests to either of these URL’s returns a generic ‘download’ error with no specific details.”

Considering that Google has its own payments system - Google Checkout - could this be just an honest mistake, or is there something more sinister going on here?

There was quite a discussion surrounding this on the Google App Engine forum, including a comment by Google employee Marzia Niccolai, saying that it was just an accident:

Thanks for the report! This is a bug, and we have located the problem. There was an error in our anti-phishing protections that was blocking some specific URL domains from being fetched using the URLFetch service. This was an oversight on our part, and these specific domain restrictions will be removed in the next few days.

If the developers themselves are to be believed, this was a deliberate block by Google and now that it has been discovered the search giant is now back-pedaling to make everything OK again.