When to choose App Engine over Cloud Functions?

Solution 1:

Cloud Functions (CFs) and Google App Engine (GAE) are different tools for different jobs. Using the right tool for the job is usually a good idea.

Driving a nail using pliers might be possible, but it won't be as convenient as using a hammer. Similarly building a complex app using CFs might be possible, but building it using GAE would definitely be more convenient.

CFs have several disadvantages compared to GAE (in the context of building more complex applications, of course):

• they're limited to Node.js, Python, Go, Java, .NET Core, and Ruby. GAE supports several other popular programming languages
• they're really designed for lightweight, standalone pieces of functionality, attempting to build complex applications using such components quickly becomes "awkward". Yes, the inter-relationship context for every individual request must be restored on GAE just as well, only GAE benefits from more convenient means of doing that which aren't available on CFs. For example user session management, as discussed in other comments
• GAE apps have an app context that survives across individual requests, CFs don't have that. Such context makes access to certain Google services more efficient/performant (or even plain possible) for GAE apps, but not for CFs. For example memcached.
• the availability of the app context for GAE apps can support more efficient/performant client libraries for other services which can't operate on CFs. For example accessing the datastore using the ndb client library (only available for standard env GAE python apps) can be more efficient/performant than using the generic datastore client library.
• GAE can be more cost effective as it's "wholesale" priced (based on instance-hours, regardless of how many requests a particular instance serves) compared to "retail" pricing of CFs (where each invocation is charged separately)
• response times might be typically shorter for GAE apps than CFs since typically the app instance handling the request is already running, thus:
  • the GAE app context doesn't need to be loaded/restored, it's already available, CFs need to load/restore it
  • the handling code is (most of the time) already loaded, CFs' code still needs to be loaded. Not to sure about this one, tho, I guess it depends on the underlying implementation.

Solution 2:

App Engine is better suited to applications, which have numerous pieces of functionality behaving in various inter-related (or even unrelated) ways, while cloud functions are more specifically single-purpose functions that respond to some event and perform some specific action.

App Engine offers numerous choices of language, and more management options, while cloud functions are limited in those areas.

You could easily replicate Cloud Functions on App Engine, but replicating a large scale App Engine application using a bunch of discrete Could Functions would be complicated. For example, the backend of Spotify is App Engine based.

Another way to put this is that for a significantly large application, starting with a more complex system like App Engine can lead to a codebase which is less complex, or at least, easier to manage or understand.

Ultimately these both run on similar underlying infrastructure at Google, and it's up to you to decide which one works for the task at hand. Furthermore, There is nothing stopping you from mixing elements of both in a single project.