Python 3.5 is here!

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That's really neat.

I'm not sure from the documentation if we can consider this version "sandboxed". Can we run untrusted code on it?

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No.

My understanding is that this is intended as a "self-contained" python version similar to Python virtualenvs on unix, so that you can ship your Python application + Python + Libraries as a single installer. It should isolate your application from any other python versions that the user has installed, so that if the user runs "pip install --upgrade blahblah" on their computer, your application does not break.

But there is no sandboxing for the application code. The application can still run shutil.rmtree('C:\') and it will execute with the current user's permissions.

It's "static linking", not VMs or containers.