They all have revenues. Whether they make profits is another question, but that's not relevant to the point. If HFTs didn't at least have positive revenues from their trades, then no, they wouldn't be buying expensive servers and hiring expensive talent. Money extracted from the market is the issue here, not whether the amount extracted is sufficient to cover costs.
I understand where you are coming from, but investments are not made the way you are assuming.
An HFT investment likely involves someone deciding they want to create an HFT fund, going out to institutional investors and selling them on the idea that THEIR fund will be profitable.
That happens over and over and investors in these HFTs (as well as hedge funds, PE etc. all think they are picking winners who can make it work. Whether they can or not will depend on execution.
Investment in a sector, industry, or asset class does not mean there is net winning from that sector.
At the end of the day, HFT is still competitive since they are bidding against each other (hence the arms race for faster equipment). Even if the market is growing for HFT now, it does not mean it will be forever. At some point it will become mature and all that will be left is net negative HFT profitability with all the benefit going to investors in the form of liquidity.
I am not backing up HFT because I trade in HFT, I do not. I am backing it up because I find it agitating that smart people on HN look at HFT and assume because they are smart, and because they don’t understand it that it must be bad. If something in the market is happening you don’t fully understand it really pays to sit back for a second and think about it.
(I’m guilty of not doing that with a variety of topics too and I do not fully understand HFT, but I understand enough to say that I cannot say with any certainty that it is bad and lean more to saying it is net good.)
Mutual funds beat the bench?
Hegde funds?
Airlines? They spend a ton of money on fixed costs.
Some make money some do not.