Is Robinhood selling user information?

Robinhood's business model includes selling user trading information to high-frequency traders and hedge funds. This practice involves aggregating the orders from Robinhood users and selling that information, so the buyers know in advance what Robinhood users are planning to buy. High-frequency traders might then purchase these stocks and sell them back to Robinhood users at a slight markup. Brad Barrett pointed out that while this practice might not significantly impact buy-and-hold investors who are not making numerous trades, it is more problematic for those who trade frequently, as they could be unknowingly selling their own trading details to parties that use it to their advantage 1.

Additionally, Brad Barrett highlighted how Robinhood markets the platform as commission-free, creating an allure for new investors. Despite the appearance, the platform profits from selling trade information, effectively making hedge funds their true customers, who use the data to execute trades marginally ahead of Robinhood users 2. Therefore, while Robinhood users are not paying traditional commissions, they might still incur hidden costs due to the sale of their trade information. This information may not directly state that "Robinhood is selling user information" in those words, but it does describe how user trade data is used as a product for hedge funds.