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“After 16 years of very little progress, I think Germany is in for a bit of a modernization shock,” said Christian Odendahl, the Berlin-based chief economist for the Centre for European Reform.

The coalition is embracing policies like lowering the voting age to 16, expanding citizenship rights, investing in affordable housing, legalizing marijuana, and accelerating some of the country’s climate commitments.

This isn’t a revolution. But modest change is still change — if the coalition can deliver on its proposals. This is still an odd political marriage, and the compromise that brought the government to power will be tested early on. Scholz will take over as Germany is facing a dangerous coronavirus wave, and how this government handles it may hint at how cohesive, effective, and stable it really is. And stability, maybe more than anything else, may be the measure of political success.

Scholz has already pulled off a victory by getting the coalition together

Olaf Scholz and the center-left Social Democrats (SPD) narrowly won the September federal 2021 elections. He previously served as the vice chancellor and finance minister in Merkel’s government, and the campaign framed him as a competent and stable leader — the next best thing to the still very popular Merkel.

It worked, just enough. The SPD didn’t win enough seats in the Bundestag (the German parliament) to govern on its own, but neither did any other party, which meant some combination of parties would need to get together to form a governing coalition. This is the norm in German politics.

Neither of the two big parties, the SPD or the Christian Democratic Union, wanted to form a grand coalition (which had existed for 12 of Merkel’s 16 years as chancellor), which meant three parties would need to join up, a pretty rare phenomenon at the federal level that hasn’t happened since 1949. But the vote was close enough that the pro-business Free Democrats and the left-leaning, pro-environment Greens could choose who they wanted to work with, the SPD or the CDU. That gave them a lot of leverage, as they could basically anoint the next chancellor. Ultimately, the SPD, the Greens, and the Free Democrats agreed to go into talks.

It was still a bit awkward. This “traffic light” coalition — named for the respective party colors of red (SPD), yellow (FDP), and green (well, Greens) — isn’t exactly a natural ideological fit. The SPD and the Greens exist on the left side of the political spectrum, so they’re more in sync. But the Free Democrats are very pro-free market, and supports lower tax, which doesn’t always mix well with an ambitious social agenda.

Given these gaps, it seemed Merkel would be caretaker chancellor for many months more. Tense, long-drawn out negotiations, potentially lasting into 2022, were predicted. Instead, the negotiations happened with little public squabbling and few leaks. The three parties finalized a coalition deal in just about two months, outlined in a fairly detailed 177-page document. The consensus meant Merkel would come a few weeks shy of the record for longest-serving chancellor.

The coalition found ways to fit together everyone’s big priorities. Each got some, if not all, of what they wanted, which allowed them to sell this agreement to their respective bases.

The SPD, of course, gets the chancellery, along with important ministries like interior (think homeland security), which will allow them to beef up their security credentials, and housing and labor, core to their constituencies and reflective of the party’s platform on wages and housing.

The Greens scored the foreign ministry, to be led by party co-leader Annalena Baerbock, who has embraced a more human rights-centric foreign policy, especially when it comes to Russia and China, which is reflected to a degree in the document outlining the coalition’s vision. The Greens co-leader Robert Habeck will also lead a new economy and climate ministry, which will give the Greens the chance to work with Germany’s all-important industrial sector as it transitions to more climate-friendly policies.

The Free Democrats, for their part, won the very coveted finance ministry, to be headed by party leader Christian Lindner. This will give them power of the purse strings, potentially keeping any too-ambitious spending plans in check. The coalition agreement right now uses some interesting accounting, but has broadly agreed not to increase taxes to pay for programs on its agenda.

As far as compromises go, it’s not too bad.

 Bernd Von Jutrczenka/picture alliance via Getty Images
From left, Foreign Minister Annalena Baerbock, co-leader of the Greens, and SPD leader Saskia Esken sign the coalition agreement of the SPD, the Greens, and the FDP to form a federal government in Berlin on December 7. Behind them are Robert Habeck, co-leader of the Greens, Chancellor Olaf Scholz of the SPD, and Christian Lindner, FDP leader.

But how stable this government will be once it takes over is the big question. Even before the coalition government was formally announced, the SPD, FDP, and the Greens started finding ways to work together. In November, the three parties worked together on possible new Covid-19 measures, and are planning to introduce new vaccine mandates. At the same time, the Bundestag let federal emergency orders expire in November, which Merkel’s government had used to help coordinate the country’s pandemic response over the past year. The FDP was largely opposed to those orders. Compromise, in action.

It’s just one data point, but there are some other hopeful signs. Sudha David-Wilp, a Berlin-based senior transatlantic fellow at the German Marshall Fund, said this coalition was really a choice — the parties wanted to do this, and work it out, and all had something to gain from doing it. It wasn’t, as in the past, a government of last resort. As Scholz himself said, negotiations happened in a “friendly but intense atmosphere, an atmosphere full of trust.”

If anything, self-interest could help keep the coalition intact. “All three parties agree that they are running this coalition with an eye on the 2025 election,” Odendahl said. “They want to make sure that this is not just a one-off, but that all three parties can gain from this and do reasonably and equally well in the next election.”

And despite the differences, the three parties are unified around some big things. All three are fairly socially progressive, for example, on things like LGBT rights, and the coalition has proposed an agenda including greater protections for trans people and ending restrictions on blood donations from gay men. The parties, too, may have different ideas of what progress means, but they are coalescing around the idea that Germany has to move a bit forward, and faster, to tackle challenges like climate change.

Scholz called the coalition “united by the will to make this country better.” Baerbock called it “a new start for more progress.” Lindner said: “It is our remit to modernize this country together.”

Supporters of both the Greens and the Free Democrats are some of Germany’s youngest voters, and so this orientation made sense — especially, again, if this is as much about holding power now as it is about holding power four years from now.

The coalition wants to lower the voting age in Germany to 16. It wants to legalize weed, an issue Merkel never really got behind. Climate change was a big issue among all parties during the 2021 elections, and this agreement speeds up the timeline for Germany to abandon coal, from 2038 to 2030. The plan also calls for social investments, like building 400,000 affordable housing units and raising the minimum wage to 12 euro an hour.

As big as some of these ambitions are, it’s worth remembering that the chancellor himself, Scholz, is still a 60-something guy who served as Merkel’s finance minister and ran with the campaign slogan “Kompetenz.”

“Olaf Scholz, who has the disposition, has the temperament, has even some of the affections of the outgoing chancellor who is admittedly rather legendary, so they’re getting almost more of the same in terms of the type of leadership,” said Eric Langenbacher, an expert on German and European politics and a professor at Georgetown University.

“But on the other hand,” Langenbacher added, “when you actually look at the details, this [coalition] document has the potential to be an incredibly progressive document.”

Big changes might come in domestic politics, but Germany may have a little different foreign policy too

From the outside, Merkel’s absence from the world stage feels like the major transformation.

Merkel asserted Germany’s role globally, and as she did so, her own profile grew, which also elevated the importance of Germany. “It was a hand-in-hand phenomenon,” David-Wilp said. “When she first entered office in 2005, it’s not like she thought that one day we were going to call her leader of the free world.”

Merkel leaves this legacy to the next German government. And on paper, at least, the major contours of German foreign policy remain intact. “It’s more about continuity than change,” said Markus Kaim, international security senior fellow at the German Institute for International and Security Affairs.

Kaim said the coalition agreement repeats a lot of the same themes as past coalition deals, including the importance of the trans-Atlantic relationship and the importance of the European Union.

Still, there are some shifts, especially when it comes to relations with China. There are specific mentions of issues like Taiwan, Xinjiang, and human rights violations, among others. The tone of the rhetoric in the coalition agreement is much more hawkish, which experts said has a lot to do with the Chinese government’s actions, and Germany’s perception of those policies, in the last four years. “It’s not just vague rhetoric, there’s actual mention of change,” said Tyson Barker, head of the technology and global affairs program for the German Council on Foreign Relations.

This may also tie into a subtler shift to a more values-driven foreign policy. The Greens, especially, have pushed to confront Russia and China on human rights abuses, and to elevate those concerns over financial ties with those powers. Merkel also espoused these values, she was also a pragmatist when it came to international politics.

Of course, no one is exactly sure what this might look like in practice, or if it is practiced at all. Merkel centralized foreign policy in the chancellery; she dealt with Europe, and China, and Russia, and the United States. Most experts believed the chancellery, and Scholz, would continue to define and guide foreign and EU policy, but his worldview is not really well understood. Another big question is how much influence the Greens will have, and whether any power will devolve back to the foreign ministry, giving Baerbock a larger international profile.

At the very least, experts said, it will likely help elevate climate change as an international issue even more. “When Baerbock goes into a meeting with another foreign minister, be it from Russia, China, Saudi Arabia, the United States, whereas in the old talking points or order of issues, climate change might have been sixth, or tenth, it’s going to be two or three,” Barker said.

Foreign policy or EU policy didn’t really factor very much into the election, but Scholz may quickly be tested on diplomatic skills, especially with the brewing crisis in Ukraine. At the same time, the new German government likely wants to focus much closer to home, especially on the pandemic, the recovery, and its social and economic policy agenda.

“Most people, I think, recognize that there needs to be this kind of greater domestic focus, and that will also renew, and perhaps empower Germany, so that it can continue this global role abroad,” Langenbacher said.

Beyond that, what’s needed is “transparency about how a person gets in a situation where they’re deciding adoption,” Bagshaw said. “Why are we not assisting that person to keep their baby if they can and want to?”

These are complicated questions that will require a hard look at America’s social safety net and the politics and economics of adoption. But Dobbs v. Jackson isn’t about any of those things. It’s about abortion, and whether a state has the right to ban it prior to viability, usually dated at about 24 weeks.

According to Vox’s Ian Millhiser, all signs currently suggest that next year, when the Court hands down a decision in Dobbs, it will rule that a state does have that right, at least in certain circumstances. Shortly thereafter, it’s likely that states across the South and Midwest, armed with the decision, will so heavily restrict abortion access that their residents will no longer be able to get a legal abortion unless they have the money and time to travel out of state, perhaps thousands of miles, to a place where abortion is still allowed.

Many abortion opponents argue — and Barrett, with her questioning, has implied — that it won’t really matter because anyone who doesn’t want to have a child can simply give that child up.

To many reproductive justice advocates and people who study adoption, that argument is a red herring. It ignores, they say, a simple truth: that carrying an unwanted pregnancy to term irrevocably alters the course of a person’s life. Banning abortion will take some of the power to determine that course away from pregnant people and give it to the state, and the availability of adoption does nothing to change that.

These arguments aren’t necessarily wrong — there are plenty of malicious apps out there — but they don’t account for the fact that Apple doesn’t seem to have any problem with its Mac computers getting their apps from third-party app stores or through sideloading.

As for those commissions, Apple is quick to point out that the vast majority of apps, which are free, don’t pay Apple anything at all and still get all of the App Store’s benefits. Many apps are funded by selling ads and user data, which they don’t have to share with Apple, though Apple has recently tried to make this outside revenue stream less lucrative for developers by introducing anti-tracking features into iOS.

Those measures, which Apple says are designed to improve user privacy, could ultimately force developers to charge users for apps (more money for Apple!). So when Apple decided to stop much of that data flow, it upended an entire ecosystem worth hundreds of billions of dollars a year — Facebook was even reportedly considering filing an antitrust lawsuit over it. That’s how much control Apple has over its devices and, by extension, a considerable part of the global economy.

A privacy pop-up on an Apple iPhone reads, “Allow Facebook to track your activity across other companies’ apps and 
websites? This allows Facebook to provide you with a better ads experience. Ask app not to track. Allow.” Christoph Dernbach/picture alliance via Getty Images
A privacy notice on an iPhone allows the user to decide whether to permit cross-app tracking.

The App Store tax is also in line with what other app stores charge, per an independent report that Apple commissioned last year. Apple, the app store pioneer, was the one that set that 30 percent app store commission rate in the first place.

And Apple does allow for ways to get around some of its App Store taxes. People can purchase subscriptions and certain in-app services outside of apps if they have an account with the developer, which means no App Store tax to either raise prices or cut into the developer’s profit margin. Going to the developer’s website to pay also takes several more steps and more time on the part of the customer to do it.

But in the US, Apple’s best defense against accusations that its App Store is an illegal monopoly may be to simply point to existing antitrust laws, or at least how courts interpret them. Apple does have a monopoly on app stores on Apple devices, but there’s nothing necessarily illegal about that. Monopolies are only illegal if they operate in anti-competitive ways, and the bar to proving even that is pretty high. For the last four decades, courts have interpreted the law as protecting competition (and, by extension, the consumers who supposedly benefit from it), not competitors.

“Our law is very, very conservative,” Eleanor M. Fox, a professor of antitrust law and competition policy at New York University, told Recode. “Companies — even monopoly companies — do not have a duty to deal, and they don’t have a duty to deal fairly.”

We’ve seen this precedent at work in the Epic Games v. Apple case. In August 2020, Epic Games, the developer behind the popular game Fortnite, sued Apple over its refusal to allow alternate app stores and payment systems, as well as its anti-steering policy that forbids developers from linking out to alternate ways to pay for app services or even telling users that other payment methods are possible. Apple kicked Fortnite out of its App Store when Epic tried to flout its rules. A federal judge ruled in September that Apple was well within its rights to do so.

The judge noted that the App Store had “procompetitive justifications.” Even though she found that Apple had a large part of the mobile gaming transactions market and that the App Store’s profit margins were “extraordinarily high,” she didn’t think it created a barrier to entry for developers, nor that it was harming innovation. (Epic has appealed this ruling.)

“Success is not illegal,” the judge wrote.

Epic’s only victory was that the judge ordered Apple to allow developers to link out to and inform users about other ways to pay for app services. Apple has appealed that particular ruling, and according to a court filing, the company may even try to charge commissions on purchases made through the alternate payment systems if it’s forced to let developers link out to them. Even when Apple loses, it tries to find a way to win.

A person in a dark suit carries two large binders full of papers. Philip Pacheco/Getty Images

Legal staff representing Epic Games carry documents for trial at the United States District Court in Oakland, California, in May.

Apple’s attempts to avoid antitrust actions

While Apple insists that it isn’t doing anything wrong, the company appears to be concerned that its control over its devices faces some real threats. Apple historically refuses to give up ground on just about everything, yet it’s already made notable adjustments to some of its more controversial policies that could make some apps or services cheaper, or at least easier for the user to find cheaper ways to pay for them. Some of these changes were mandatory, yes, but others appear to be an effort to ward off harsher regulations or judgments.

For instance, Apple loosened its notoriously tight grip on repairs to its devices, allowing more independent shops and, very recently, individual consumers, to have access to the parts and instructions necessary to make certain fixes. This comes in the midst of a push for “right to repair” laws and pressure from the Biden administration and the Federal Trade Commission. But Apple still requires that its own parts be used for these repairs and sets the prices for them.

The stickiness and required usage of Apple’s native apps has long been a gripe from many iPhone users and a bad look for the company from an antitrust perspective. So this year, Apple started allowing users to select their own default apps for web browsing and mail; previously, Apple’s Safari and Mail apps were the mandatory default. Users have been able to delete most of the Apple apps that come pre-installed on their phones since 2018.

Apple has also given some developers a break on the App Store tax and anti-steering policies, which could reduce prices for consumers. Developers who make less than $1 million a year now only have to pay a 15 percent App Store tax. This came about as part of a settlement of a class action lawsuit, but Apple has presented it as a “Small Business Program” that’s “designed to accelerate innovation” (a phrase that could be read as implying that the 30 percent commission decelerated innovation).

Apple is also going to let developers contact customers outside of the app to let them know about alternate payment methods. As part of an agreement with the Japan Fair Trade Commission, Apple will soon let “reader” apps (that is, apps like Netflix and Spotify that offer media for purchase or subscription) link out to their own websites to make it easier for users to purchase subscriptions outside of Apple’s in-app payment system.

In 2016, Apple also cut its commission to 15 percent for subscription apps after the first year. Of course, this change was revealed at the same time as Apple’s announcement that it would sell search ads in its App Store, giving itself yet another exclusive source of revenue (and giving users a bunch of ads when they search the App Store).

But these concessions do nothing for the source of the vast majority of the App Store’s commissions: games from developers that make more than $1 million a year. And Apple hasn’t wavered on the practices that have drawn the bulk of the accusations that Apple’s practices — including the company not allowing alternate App Stores or sideloading, and not allowing alternate payment systems — are anti-competitive, increase prices for consumers, and reduce their choice. It seems unlikely that Apple will give way any time soon. Unless, of course, it has to.

How does Apple’s walled garden grow — or die?

There are plenty of reasons why Apple might have to change its ways. The company may have won most of the Epic Games lawsuit (pending Epic’s appeal), but it still faces antitrust action on several fronts that will play out over the coming years.

Margrethe Vestager speaking onstage in front of a wall that reads, “Antitrust: Apple 
App Store practices Music streaming.”

Francisco Seco/AFP via Getty Images
Margrethe Vestager, European commissioner for competition, speaks during an online news conference on the Apple antitrust case at EU headquarters in Brussels, in April.

A growing number of countries have introduced or proposed laws that specifically target certain App Store practices, or are investigating Apple for potential violations of their competition rules. These include but are not limited to the European Union, the United Kingdom, Germany, the Netherlands, Japan, South Korea, and Australia.

Those could result in fines, which Apple, a $2 trillion company, probably isn’t too worried about. It also wouldn’t be the first time Apple has paid a considerable sum over antitrust violations. Another outcome — one that would be a much more troubling prospect for Apple — would be if the company were forced to change its business practices in order to keep operating in those countries.

But in the United States, courts haven’t seemed too bothered by Apple’s App Store rules. A federal judge recently threw out a class action lawsuit from developers that said Apple was abusing its monopoly power by refusing to allow their apps in the App Store. As the Epic Games ruling indicates, American antitrust laws (and most courts’ interpretation of them) haven’t done much to change or force change on Big Tech companies. If you’re a lawmaker who is concerned about Big Tech’s considerable power, that’s a green light to propose laws that will.

Sen. Amy Klobuchar (D-MN), for example, said the ruling showed that “much more must be done” about the “serious competition concerns” app stores raise. As chair of the Judiciary Committee’s Subcommittee on Antitrust, as well as a member of the Commerce Committee, she’s in a pretty good position to push through bills that do just that.

Klobuchar is a co-sponsor of the Open App Markets Act, a bipartisan, bicameral bill that would do most of what Epic Games wanted. The legislation would force Apple to allow third-party app stores and the sideloading of third-party apps, require that app stores allow alternate payment systems, and forbid anti-steering policies. It would also ban app stores from giving their own apps special treatment or using non-public data from third-party apps to develop their own, competing apps.

 Patrick Semansky/Getty Images
Sens. Amy Klobuchar and Marsha Blackburn (R-TN) confer at a Senate hearing in September. They, along with Sen. Richard Blumenthal (D-CT), have sponsored the Open App Markets Act.

The Open App Markets Act isn’t the only bill that could drastically change how Apple runs its App Store. Several more are currently making their way through both houses of Congress as part of its package of antitrust bills that target Big Tech. If passed, they’d also force Apple to include other app stores on its devices and forbid it from giving its own apps special treatment. One bill, the Ending Platform Monopolies Act, would even force Apple to break up its App Store and app development units into separate businesses.

All of these bills are bipartisan, but it’s far from certain that any of them will become law. If they do, and in something close to their current form, they could benefit consumers by giving them more choice of apps on their phone, and it could make those apps cheaper. It may also subject iPhone users to additional safety and security threats, as Apple alleges, while prices stay largely unchanged.

Apple says it supports updates to laws and regulations that benefit consumers, like privacy legislation — which the current bills on the table don’t do much to directly address.

The Department of Justice, which has been investigating Apple since 2019, is reportedly preparing a lawsuit concerning the App Store. It and the FTC enforce America’s antitrust laws. Both agencies are headed up by people who have accused Apple of anti-competitive actions or worked for firms that have. Lina Khan, a Big Tech critic who helped write the House’s report, is now the chair of the FTC, and Jonathan Kanter, who advised Spotify when it lobbied Congress to take action against Apple, leads the DOJ’s antitrust division. Both agencies may get a major, needed funding boost if the Build Back Better Act and a bill that increases merger fees for large companies pass.

With all of this said, Apple, “the warm and fuzzy monopolist,” is probably in a better position with its ongoing antitrust problems than its fellow Big Tech titans are with theirs. It has, so far, faced relatively less criticism in general, and many of the proposed bills and regulations don’t threaten its business model as much as they do that of the other companies. If Apple were forced to allow other app stores on its devices tomorrow, it would still have plenty of very healthy revenue streams.

Those may still include the App Store. It’s not clear that many of Apple’s users would even use or want another app store. The fact that they use an iPhone and not an Android speaks to this. They could prefer or trust the security and privacy protections in the App Store over those of, say, a Facebook app store. Then again, if those other app stores took a lower commission from developers, allowing them to charge less than the Apple App Store does, Apple’s customers may well vote with their wallets, and developers might only offer their apps in stores that give them a better margin. In which case, Apple might just find itself finally having to compete for apps and customers — and maybe even lowering the App Store tax to do it.

Apple wouldn’t be thrilled, but it would be just fine.

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