Market Making Practices

This is market making and is done in currency markets. Your broker/dealer might be the other party taking the other side of the trade. The argument over there is that as long as you trade major currencies, the market depth and liquidity will ensure narrower bid-ask spreads and that you will not get too raw of a deal.This is different because it seems the account holders were tricked into believing they were buying/selling securities, which are highly regulated activities.

Isn't this sort of what the investment firms "dark pools" are doing? not executing order in the public market but in their own private market?

Does "almost everyone" mean the retail brokerages, like E-trade, TDAmeritrade, etc, or just the HFTs, hedge funds, etc?

The exchange can't trade on their own platform, it would be a massive conflict of interest. The liquidity is typically provided by market makers, who are given incentives to do so. They also get to capture the spread, which is itself fairly valuable. You don't need a conspiracy theory to explain it.

Market makers profit off the bid/ask, not exchanges.

The title made me think this was about market makers and takers.

How do they make money? And why does it matter who executes your transaction as a retail investor.

We kind of already are doing this: https://www.bloomberg.com/opinion/articles/2019-08-01/why-ex...

The exchange is not a counterparty. You have market makers there as well. Even in very liquid markets, it may be common to trade against market makers, just at a tighter bid-ask spread.

There have always been "market-makers" why do you care if they are algorithmic or human ?