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Most of the zero sum part is in capturing a percentage of the positive sum that would have existed anyway. Especially in day trading, where the company has already received investments and the value created by the financial sector is just creating accurate and speedy value assessments, as well as liquidity.
Ie, maybe we have 100 traders/investors who, collectively, create $200 million in surplus value, $100 million of which is captured by them (and $100 million diffuses into the companies they invested in and customers and whatnot). A "fair" split would give each investor about $1 million in profit. But maybe one investor has an algorithm which let's them respond to news updates 10% faster than the others. And maybe this speedier algorithm actually helps create an additional $1k in value due to the more accurate valuations of companies. And then they use it to arbitrage $50 million of the surplus from the other traders, leaving them with $50.001 million, and everyone else with $500k. And then someone else makes an algorithm that's 15% faster, which creates an additional $1.5k in value (but costs $1 million to design and implement) which let's them take the top arbitrage spot and get the $50 million, and the 10% guy can only arbitrage $10 million, and the other 98 people have to split the remaining 40 million.
Ie, the group is creating surplus by filling an economic niche. The more competitive people are genuinely better and thus create more value, but most of their gains come from a larger slice of the surplus created by the nice. If they failed to exist, the second best person would create most of the value, so the marginal benefit from each increase in competitiveness is less than the potential profits extracted from capturing a larger slice of the pie.
This happens in a lot of physical industries. Amazon or Walmart aren't uniquely responsible for all of the profits they gain, because in their absence someone else would fill the role. And maybe that person would only be 90% as good and create 90% as much value. So in some sense the better company is uniquely responsible for 10% of their profits, and has shared credit for 90%. But instead they just get to keep all of it instead.
It's a weird issue, because we do want to incentivize the best people to be doing stuff, and the winner takes all system does accomplish that. But there is an inherent unfairness and issues with rentseeking behaviors which actually destroy wealth because they cost more than they actually create, but are worth it anyway because they capture more of the surplus created by the niche.
This is a very accurate description. I had long conversations with finance people before (including the engineers of the company I am about to join) and this is exactly their point of view. Nothing about accurate pricing etc. They see each market as rent producing asset which you capture by being smarter and writing better and faster algorithms. Then you take these rents and attack your rivals sitting on top of other rent seeking mountains. You practically have to because otherwise they will have too many rent sources and come dominate you. It is not very different to feudal competition.
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