I've read it- It's very true profits at Schwab in aggregate are from margin loans often sitting in accounts with no activity but that doesn't have anything to do with what happens to people that trade. It's a totally different question.
Most people at Schwab are not trading a lot every month- usually their&L.
The way to properly do the analysis is run the same trades through a robinhood or a Schwab Vs IB which hardly does this nasty practice. If you have investments of any size the amount of money lost dwarfs anything in his analysis.
So while his analysis is excellent it doesn't have anything to do with the specific question at hand.
As other commenters have said, they make only a tiny amount of revenue from PFOF. If it was to the detriment of their customers, it wouldn't be worthwhile for them. But it's also possible that they don't care much about customers who do a lot of large trades, since they're making money from net interest.
The practice can pretty quickly add up to millions on a sizable account
Can you demonstrate this claim, with math? Within an order of magnitude, what would the size of that account need to be, what would its trading frequency need to be, what would its average trade need to be, and what would the average PFoF per trade need to be, to result in $1,000,000 of PFoF revenue incident to that account?
There are technologists who have an emotional relationship to the claim you just made. It feels correct. If it is correct, it should be amenable to analysis via numbers in the same fashion that other claims about numbers are amenable to e.g. multiplication.
Spoiler: There is no account which generates $1 million in PFoF fees [+]. Your estimate is off by at least 3 orders of magnitude, and more than that for e.g. typical HN users, including those who have hundreds of thousands or millions of financial assets, including those who trade relatively actively.
[+] There are plenty of accounts in the world which generate $1 million in net interest revenue; they are generally not owned by individuals but a company which doesn't have a treasury team and which doesn't execute aggressively could fairly easily do that if e.g. they raised +/- $100 million and kept it in the same place they kept their seed round.
Bid and ask spreads can be quite wide- up to a few % of the total trade size. So even tho you may be mid way within the range or even close to the bid or ask because certain exchanges never see your order - it gets filled at the bottom of the range- or worse never gets filled at all. The practice would be fine if there was transparency on it but most customers don't know what's happening and who is getting rebated and how much and that their orders are not going to all possible exchanges.
https://www.kalzumeus.com/2019/6/26/how-brokerages-make-mone...