It's a decentralized system, anyone can install and set it up. If I am running a pod and only give access to a few friends, how is that not fair use?
Mind you, this is only one of the basic cases. There are plenty of other use-cases for such a service that does not even involve copyright abuse. Imagine an indie label that sets up an instance to promote their artists. Or a music school that puts performance from their teachers/students.
There are plenty of ethical reasons for something like Funkwhale to exist, it's not on the developers to ensure that it is only going to be used in a way that doesn't cause the ire of the big-baddie RIAA.
