Flattr: we’re victims of an ‘app dictatorship’

The founders of micro-payment service Flattr say they — and the people that use their service — are victims of monopolistic behavior, after an app which used their system was blocked by Apple. (s AAPL)

Flattr’s Peter Sunde and Linus Olsson

The company went public on Monday with the news that a third-party podcasting app, Instacast, had been rejected by Apple for its integration with Flattr. The iPhone maker apparently told Instacast that the integration broke its rules for the “collection of donations”, which it says must not happen in-app — only via the web or by SMS.
But talking to me earlier from Malmo, Sweden, founders Peter Sunde and Linus Olsson said that this was basically misunderstanding of how Flattr works — because the integration does not actually result in money changing hands directly. In fact, they said, the way it works is much the same as other very popular apps that have been approved by Apple.
“Basically there are a lot of different apps that are prepaid, like Spotify and Readability and so on,” said Sunde.
“There’s even a PayPal app that lets you send money between different accounts, and subscription services where you can only use the app if you’ve paid outside of iTunes,” added Olsson. “When you get a rejection you can submit further information to Apple, which we did for Instacast — but we have no clue if they’ve even read it.”
Apple has not given any further information on why Instacast was rejected, though some have speculated that it may be because it potentially challenges iTunes 30 percent cut of in-app purchases. However, if that is the case, it seems to be based on a confusion about how Flattr works.
The Swedish startup — which pitches itself as the “like” button that actually means something — effectively turns Kickstarter-like crowdfunding into a subscription service. Users pay in a fixed sum each month, and each time they like a project or service online they press a Flattr button on the site. At the end of the month, their pool of money is distributed evenly between all of the different things that the user has liked.
In this way, Instacast’s inclusion of a Flattr button is not actually encouraging a donation — except to those with Flattr accounts, who (in any case) do not send the recipient any money directly. And the Flattr setup is done outside the app.
Sunde said it means Flattr — which has struggled to get traction but recently signed a significant deal with video website Daily Motion — has just become just the latest in a long line of services to fall foul of Apple’s opaque rules and procedures.
“People are really upset,” said Sunde. “It happens all over.”
“This is a borderline case where it’s not clear if it’s a donation service, a payment service, a bookmarking service,” said Olsson. “We’re looking at a workaround, but it’s really affecting what we want to achieve.”
Sunde — who, as one of the men behind The Pirate Bay has significant experience of the law — said that it felt as if he had been handed a sentence without ever really understanding what the evidence was against him.
“We have no clue. It’s like a jury that judges you but doesn’t explain why,” he said. “It’s an app dictatorship, or a monopoly. The problem is that we’re centralizing all of our communications… big corporates say they want a free market, but they really want to lock people up. It’s not just Apple: Google (s GOOG) is going this way, Facebook (s FB) is definitely going this way.”