{"id":335132,"date":"2025-12-07T13:52:07","date_gmt":"2025-12-07T13:52:07","guid":{"rendered":"https:\/\/www.newsbeep.com\/us\/335132\/"},"modified":"2025-12-07T13:52:07","modified_gmt":"2025-12-07T13:52:07","slug":"middlemen-like-uber-amazon-and-doordash-are-consuming-the-us-economy","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/us\/335132\/","title":{"rendered":"Middlemen Like Uber, Amazon, and DoorDash Are Consuming the US Economy"},"content":{"rendered":"

Bill Gates has been right about a lot of things over the years \u2014 Microsoft, mosquito nets<\/a>, the risk of pandemics<\/a>. One thing he was not so right about: the idea that the internet would cut out the economy’s middlemen. In his 1995 book “The Road Ahead,” Gates predicted<\/a> that the information highway would “extend the electronic marketplace and make it the ultimate go-between,” leading to a scenario where the only humans often involved in a transaction would be the actual buyer and seller. Given that you are alive in this current time, you already know that is not what happened. Instead, the internet gave way to a new class of commercial go-betweens. Amazon connects gift givers to makers of novelty socks that the recipient will almost surely never wear. Uber serves as the conduit between driver and rider. DoorDash connects (and takes a hefty fee from) the begrudging restaurant and the lazy eater. And while some more analog middlemen \u2014 sorry, travel agents<\/a> \u2014 have withered, others in industries from pharma to meatpacking have tightened their grips.<\/p>\n

Middlemen are a necessary evil in many parts of the modern economy. Supply chains are increasingly complex, so someone has to manage coordination and logistics. Consumers demand convenience, which middlemen provide. Suppliers don’t have a choice \u2014 they have to go where the people are, even if that means signing up for a delivery app or e-commerce platform that gives them a raw deal. The result: an economy where the real power doesn’t lie with the businesses making goods or performing services but instead with the intermediaries that control access and quietly set tolls.<\/p>\n

The problem with middlemen isn’t their existence. If I’m in the mood for chicken for dinner, I don’t want to drive out to the chicken farm to pick a little guy out \u2014 that would take a lot of time, and I am not an expert in what makes a good chicken. I want to be able to go buy it from the grocery store, which relies on Tyson and other middlemen to pick it up and process it. Everyone has a part to play in getting the fowl from the farm to my face. The issue is that middlemen gain so much bargaining power that both the chicken farmer and I are in a bind in terms of the conditions of his contract with Tyson and my ability as a consumer to shop around, and neither of us has full visibility into the steps along the supply chain.<\/p>\n

“What these intermediaries do is they try to stand between buyer and seller, and the way that they impose their taxes or take rates on, typically, the sellers is very opaque to the buyers,” says Hal Singer, the managing director of Econ One, an economic consulting firm.<\/p>\n

Opacity is a middleman’s superpower. Most consumers have no idea how much Amazon charges sellers on its platform, what Apple or Google skim off the top of app sales,<\/a> or what amount a pharmacy benefit manager<\/a> is keeping for itself. This hidden tax is often ultimately passed on to the consumer because the seller increases prices to offset it. And, it’s hard, if not impossible, to get around. Amazon and Apple deter sellers and developers from steering customers to cheaper channels. Credit card companies try to compel merchants to accept all of their cards, regardless of the swipe fee<\/a>. Food distributors allow farmers little leverage over contracts and pay, and some consumers come to suspect they’re not playing fair, price-wise.<\/p>\n

In this day and age, if you sell stuff online, you can’t not be on Amazon.<\/p>\n

Across industries, the pattern plays out \u2014 middlemen lock in customers with convenience and lock in suppliers with access. Intermediaries merge or acquire each other until they become entrenched or leave people with few other options.<\/p>\n

“Once a platform aggregates millions of buyers and sellers, whether it’s Amazon’s marketplace, a PBM’s drug formulary, or a ride-hail app, over time, contracts, software, and even regulations get written around those intermediaries, turning them from optional helpers into infrastructure,” says Anindya Ghose, a business professor at NYU’s Stern School of Business, in an email.<\/p>\n

In this day and age, if you sell stuff online, you can’t not be on Amazon. And if you manage to avoid buying anything as a consumer on Amazon, bless you.<\/p>\n

Some of the ways middlemen become so big and powerful can feel almost inevitable. Supply chains<\/a> are long and convoluted. Consumers value ease. Suppliers want to offload their products quickly. Economies of scale are an advantage. Middlemen can connect buyers and sellers who wouldn’t otherwise find each other, developing niche expertise that has value for both ends of the equation.<\/p>\n

“The way that they’ve grown is not that they were kind of started with this evil intent of taking over the economy. No, they grew in power because they were providing a very real service, but in the process of providing that service, they are very often also erecting blinders that limit us and our ability to see the effects of the decisions that we’re making,” Kathryn Judge, the author of “Direct: The Rise of the Middleman Economy and the Power of Going to the Source,” told me in a 2022 podcast interview.<\/p>\n

A lot of what middlemen solve for are fixed costs, explains Matthew Grant, an assistant professor of economics at Dartmouth College. They make investments to set up and maintain infrastructure and markets that smaller businesses can’t undertake as one-offs on their own. If you’re a bookseller or a small farmer, owning and operating a global transportation network, writing up hundreds of contracts, and building out extensive legal and accounting teams isn’t really feasible. To offset those costs and generate meaningful profits for taking on all that work, middlemen gain significant market share and leverage it to recoup their expenses.<\/p>\n

“In practice, there aren’t too many other companies that are trying to be Amazon because they know if they tried it, it would not make money,” Grant says.<\/p>\n

High fixed costs foster high barriers to entry, which lead to a handful of dominant intermediaries. It’s central to the business model.<\/p>\n

Middlemen come with trade-offs. Walmart has cheap prices<\/a>, but if it squeezes local retailers, it also means fewer choices. Sysco is a convenient partner for restaurants and other food service operations, but it gets to call a lot of shots with suppliers and buyers if it’s the only game in town. Uber is nice for users who want to avoid flagging down vehicles in the street, and its drivers get an extra way to make money. But it’s killed off how we used to do this \u2014 taxis \u2014 and a lot of drivers and riders<\/a> feel like ultimately they’re getting screwed.<\/p>\n

If there aren’t many other competitors, or none at all, middlemen get to charge whatever they want. People on both sides <\/a>start grumbling about how they’re either paying too much or not getting paid enough, and it feels like neither side is getting a good deal<\/a>. That’s where you get complaints about fees on ticketing platforms while artists bemoan how unsustainable a music career is. Mystery charges on food delivery frustrate both eaters and restaurants. Both guests and hosts on vacation rental websites realize this would be a better deal for both parties if they could negotiate directly.<\/p>\n

Consumers and producers end up griping about each other while the middlemen quietly skate on by.<\/p>\n

“A very simple way to think about it is that a middleman increases the size of the pie,” says Marina Krakovsky, the author of the book “The Middleman Economy: How Brokers, Agents, Dealers, and Everyday Matchmakers Create Value and Profit.” “But then how big a slice do they take for themselves?”<\/p>\n

In many cases, it’s a pretty big one, as being a behemoth middleman is a lucrative endeavor. Amazon booked $638 billion in sales in 2024, Uber generated $44 billion in revenue, and Sysco reported $80 billion in sales. Pharmacy benefits managers, which sit between health insurers and drug manufacturers, rake in billions of dollars a year through a web of fees, price spreads, and rebate sharing that’s almost impossible for a layperson to untangle, and they often drive up prices, too.<\/p>\n

“Collectively, these intermediaries sit on top of major money flows,” Ghose says.<\/p>\n

Parties on either side of the transaction the middleman is facilitating might not always know who to blame. Buyers on a secondary ticket market get mad at the seller when their tickets don’t come through<\/a>, when in reality, it’s the platform itself that failed to do its due diligence. The delivery guy thinks the customer is a cheapskate after driving through a storm for a minuscule tip, without realizing the platform prompted that option. The restaurant patron is appalled by the menu’s high prices, while the restaurant owner is barely making it through the month. Consumers and producers end up griping about each other while the middlemen quietly skate on by.<\/p>\n

The answer isn’t that there should be no middlemen \u2014 again, I am not interested in making weekly trips to the chicken farm, or any farm, for that matter. But it would be better if there were more rules of the road to ensure they don’t turn convenience into oversize markups and exorbitant profits. That could take a lot of different forms \u2014 increased transparency, more regulatory oversight and enforcement, new laws, or different efforts to ensure competition. Perhaps disclosure requirements for platform fees<\/a> or restrictions on anti-steering clauses. But given how entrenched \u2014 and opaque \u2014 these go-betweens can be, wrangling their power has proven to be a tough task.<\/p>\n

If an industry has one middleman, it’s a problem. The same goes for if it’s four and they’re all colluding.<\/p>\n

“One of the problems and probably a predicate is how concentrated all these markets are,” Singer says.<\/p>\n

“It would be great if we had a choice of middlemen and they were competing with each other to be the best middleman they can be on price, on quality, on ethics, and everything,” Krakovsky says. “And often we lose that.”<\/p>\n

And so, here we sit, in an economy dominated by middlemen, telling ourselves we’ll do better this holiday season and not rely so much on Amazon, and then deciding maybe that’s better as a New Year’s resolution.<\/p>\n

Emily Stewart<\/a> is a senior correspondent at Business Insider, writing about business and the economy.<\/p>\n

\n Business Insider’s Discourse stories provide perspectives on the day’s most pressing issues, informed by analysis, reporting, and expertise.\n <\/p>\n","protected":false},"excerpt":{"rendered":"Bill Gates has been right about a lot of things over the years \u2014 Microsoft, mosquito nets, the…\n","protected":false},"author":2,"featured_media":335133,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[27],"tags":[169291,960,28,5457,4133,49231,101,169292,3591,62356,8617,169293,19447,27296,146313,38687],"class_list":["post-335132","post","type-post","status-publish","format-standard","has-post-thumbnail","category-business","tag-actual-buyer","tag-amazon","tag-business","tag-consumer","tag-contract","tag-e-commerce-platform","tag-economy","tag-intermediary","tag-lot","tag-middleman","tag-price","tag-real-power","tag-restaurant","tag-seller","tag-supplier","tag-uber"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/335132","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/comments?post=335132"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/335132\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media\/335133"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media?parent=335132"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/categories?post=335132"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/tags?post=335132"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}