Decomposition of AppTy broken

This program (taken from lens) wrongly fails in GHC's HEAD

  {-# LANGUAGE UndecidableInstances #-}
   
  import Control.Applicative
  import Control.Category
  import Prelude hiding ((.),id)
   
  newtype FocusingPlus w k s a = FocusingPlus { unfocusingPlus :: k (s, w) a }
   
  instance Functor (k (s, w)) => Functor (FocusingPlus w k s) where
    fmap f (FocusingPlus as) = FocusingPlus (fmap f as)
   
  instance Applicative (k (s, w)) => Applicative (FocusingPlus w k s) where
    pure = FocusingPlus . pure
    FocusingPlus kf <*> FocusingPlus ka = FocusingPlus (kf <*> ka)

Trac metadata

Trac field	Value
Version	7.8.3
Type	Bug
TypeOfFailure	OtherFailure
Priority	normal
Resolution	Unresolved
Component	Compiler
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