Developer Petko D. Petkov noticed the Google App Engine was blocking requests to PayPal and posted the problem on the Google Groups forum (http://tinyurl.com/4t5t98). There was speculation the block was deliberate, given past tensions between the two companies over their competing online payment services (eBay prohibits its sellers from accepting Google Checkout). But a Google representative posting on the forum said it was a bug:
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.
That didn't stop TechCrunch from speculating about it even after the problem was called resolved by Google: "Most developers who have commented on this so far strongly believe that this was a deliberate block by Google."