You could view it as a business decision. Will they lose reputation and customers if they don't compensate for the outage? Do they expect that the long-term cost of that loss would be more than the one-time hit of paying out now?

They may not have a legal/contractual obligation here, but that doesn't mean that treating their customers poorly is without consequence.

That one-time hit would be massive. With the benefit of hindsight, everyone is going to say they lost money by missing the perfect trades.

Yeah but your business decision was to be a high stakes gambling platform to begin with

Almost certainly they cannot compensate. If average user lost $1k that's a cool $10b they would need to compensate.

The difference is regulation. There are very few regulations and oversight on cloud compute providers, whereas an average person cannot just spin up an app and begin selling securities in a month as you can being a cloud provider.

While RH's ToS does theoretically absolve them of technical issues, they are obligated to comply with 'best execution' securities mandates, no? Separately, it'd be extremely bad for business if they refused compensation.

The point is moot anyway, since they're offering "case-by-case" compensation.

https://techcrunch.com/2020/03/03/robinhood-outage-cause/

Robinhood will have to deal with a flood of FINRA and SEC complaints from these outages. I'm unsure how much longer FINRA will allow them their broker dealer license with a copious amount of failure in the rear view mirror.

Arbitration is forced, but Robinhood is on the hook for the fees for everyone who decides to arbitrate. Robinhood users might not get anything, but they can still cause pain.

if that were true thinkorswim would have been gone years ago. heavy futures volatility killed it for days at a time

You mean "case-by-case" denial delay and obfuscation.