Who am I betting against

If I bet on higher lower who am I betting against? My understanding of betfair is that betfair is the middle man. In that instance why are the odds pre programmed and at set amounts? There is no way I am betting against another member of betfair. If I am betting against betfair then surely their is a conflict of interests in terms of the game being truly random? Or is betfar using company who will lay odds regardless as long as they are just in their favour?