I don't have enough technical knowledge about HFT to refute your arguments.
However, thinking logically about the whole HFT business: As I understand it it's something like this:
Let's say I want to buy 100 apples at $1 a piece. A middle man comes and says: I see that you want to buy 100 apples. Let me buy them for you. Here they are (an apple is now $1.001)
Why do I need this middle man to steal from me? You will probably say that they are providing liquidity. It's still stealing and the markets had enough liquidity before the whole HFT gang came.
95 percent of high-frequency trader orders are cancelled (so fast that nobody can take them). Some high-frequency traders have claimed to be profitable on over 99 percent of their trading days.
I don't buy the "providing liquidity" defense of HFT.
That's exactly what I was thinking. When high frequency traders are doing it it's OK but when this guy tricks them into actually taking some risks it's fraud.
They spent on WhatsApp $4B (cash) and $(12+3)B (in stock). $12B is nothing when you have $173B.
If the $173B evaluation is correct, it's a totally different story. But as long as people think it's correct, Facebook can profit and buy any competitor with investor's money.