Does Oracle own Java?

The answer to your question - does oracle own Java is - Sun Microsystems created Java. Oracle bought Sun, and thus they became the owners of Java. Java (JVM and JDK) is open source, and you are free to use it. This is under the GPL though, and if they do any changes to the actual JVM or JDK, they will have to release those changes. I'm not aware how App Engine works, and why Google would be in trouble, if they are.

If you create a program in Java, you don't have to release it as open source (or the GPL, more specifically), as long as you don't use GPL'd code, which you wouldn't if you didn't add that yourself.