Legally, it was created at Google. Technically, Orkut software was copied from the startup that Orkut the person was hired from.

They should open source it.

It probably would take too much effort to make it usable without Google's internal APIs (storage, search, etc).

They could open source it and have other people use app engine if people want to use it. Otherwise if its open source people could implement what ever they want on the back end.

App Engine is very different from the internal APIs most production services depend on.