Flex Video Explainer | Three-sided Marketplaces + Fee Transparency

Building on our previous blogs on three-sided marketplaces, competition in the dynamic app-based platform industry, and fee transparency, take a look at our new video on how app-based delivery platforms perform as three-sided marketplaces – and why that matters when we talk about fees.

Every day, app-based delivery platforms help millions of consumers get food, groceries, and other goods quickly and conveniently. These platforms facilitate a logistically complex three-sided marketplace that seamlessly brings together consumers, local merchants, and a network of independent delivery workers.

In three-sided marketplaces like app-based delivery platforms, there are two basic cost components: 1) the price of the goods, generally set by the restaurants, grocers, and other businesses that choose to sell on these platforms and 2) service and delivery fees, set by app-based platforms, go toward running the logistics and services crucial to making on-demand delivery possible—including compensating app-based delivery workers.

While there are no doubt bona fide instances of “junk” fees, that’s not the case in app-based platform marketplaces, where fees are transparently disclosed to consumers and reflect costs associated with delivering convenience on-demand and at the push of a button.

The Federal Trade Commission acknowledged this important distinction in December 2024 and omitted the app-based industry from their final rule on junk fees. However, many states are looking to legislate or regulate on this issue, often following political rhetoric rather than the economic reality.

This matters because well-intentioned efforts to curb actual “junk fees” should not undermine transparent, pro-consumer services and business models, including those offered by app-based delivery platforms. And we hope this new video helps explain that important distinction.