Hey is a new approach to email that was launched earlier this week by Basecamp. The service, which comes with its own hey.com email address, has a number of unique features for managing messages with an emphasis on screening tools. Hey does not, however, allow you to use its client app with other email services like Gmail, which is important to keep in mind.

Equally important to this story as it unfolded over the past several days is the fact that Hey does not offer an In-App Purchase for its service. The service is available from Basecamp only. As a result, if you download Hey’s iOS app, but have not yet purchased a license from Basecamp, the app doesn’t do anything except request your Hey login credentials.

The service launched on Monday with access provided via the web and native Windows, Android, Linux, Mac, and iOS apps. At the same time, Hey was being launched, an update to its iOS app, which fixed bugs, was rejected by Apple. The timing is unclear, but TechCrunch reports that Hey’s Mac app was rejected too.

The story of Hey’s rejection and the subsequent back and forth between App Review and Basecamp was reported in detail by David Pierce at Protocol. App Review cited Guideline 3.1.1 of the App Review Guidelines for the rejection, which reads:

If you want to unlock features or functionality within your app, (by way of example: subscriptions, in-game currencies, game levels, access to premium content, or unlocking a full version), you must use in-app purchase. Apps may not use their own mechanisms to unlock content or functionality, such as license keys, augmented reality markers, QR codes, etc. Apps and their metadata may not include buttons, external links, or other calls to action that direct customers to purchasing mechanisms other than in-app purchase.

The only written exception to Guideline 3.1.1 is for ‘Reader’ apps like the Netflix app, which are not required to offer In-App Purchases for digital goods. In a subsequent exchange with Apple, Hey’s reviewer noted that the service did not qualify as a Reader app.

The impasse led Basecamp founder and CTO David Heinemeier Hansson, an outspoken critic of Apple in the past, to complain publicly about the rejection on Twitter and to the press.

David Pierce reached out to Apple as part of his Protocol piece and got a curious response:

Apple told me that its actual mistake was approving the app in the first place, when it didn’t conform to its guidelines. Apple allows these kinds of client apps — where you can’t sign up, only sign in — for business services but not consumer products.

Nowhere do the App Review Guidelines draw a distinction between business services and client services.

As the week wore on, the story picked up momentum on social media and a debate erupted over questions such as:

• Was Apple properly applying the rules it had created?
• Were Apple’s rules fair and equitably applied to all developers?
• More broadly, should Apple be allowed to charge a 30% fee for services like Hey in the first place?

Adding a layer of complexity to the story, the entire debate over Hey has played out against the backdrop of news that the European Commission has opened an antitrust investigation of Apple over the App Store and Apple Pay. Also today, the US House of Representatives antitrust subcommittee chairman David Cicilline called Apple’s App Store fees ‘highway robbery’ on the Vergecast podcast. Of course, Apple’s Worldwide Developers Conference begins next week too.

Today, the dispute between Basecamp and Apple appears to have come to a head with a decision from Apple’s App Review Board, which has determined that the rejection of Hey’s app was valid. In an interview with Matthew Panzarino of TechCrunch, Apple’s Senior Vice President of Worldwide Marketing Phil Schiller explained:

“You download the app and it doesn’t work, that’s not what we want on the store,” says Schiller. This, he says, is why Apple requires in-app purchases to offer the same purchasing functionality as they would have elsewhere.

Schiller elaborated that Apple is not considering any rule changes, noting that there are “…many things that they [Basecamp] could do to make the app work within the rules that we have. We would love for them to do that.” The complete text of the letter regarding the App Review Board’s decision is reproduced in Panzarino’s story, laying out the App Review Guidelines that Apple says have been violated and making suggestions about how the app could be modified to comply with them.

Apple’s decision strikes me as consistent with its rules and policies, but that doesn’t mean it’s the right decision. Rules correctly applied that lead to unfair results should be changed. Apps that don’t do anything until a user goes somewhere else to sign up for a service are a poor user experience. There’s also a cost to Apple maintaining the App Store, but is 30% an appropriate fee for addressing those sorts of issues? It doesn’t feel fair and hasn’t for quite some time.

Apple should reevaluate its App Store policies. A lot has changed in the years since the App Store opened. Apple is a far bigger company with a tighter grip on the flow of the digital goods we consume. As a result of its growing services business, Apple also competes with a wider range of companies that use its store than ever before. It’s no longer 2008, and I expect that if Apple doesn’t take the lead in implementing meaningful changes to how it runs the App Store, governments around the world will do so for it.