You rightly argue that a rapid change in perceived business value is possible and furthermore that it is in the interest of any given individual investor in performing very quick trades.

But your examples support relative gain, not absolute gain. Even after HFT, there will be some investors who get rid of the hot potato before others (or the opposite acquire an attractive stock). It's just that the one's who are the first to trade will have to pay more resources to access powerful technology. Situations like these arise in many non-cooperative games, like an arms race, where an improved technology leads to increased loss to both sides but is unavoidable unless there is a scope for cooperation via a treaty.

Furthermore, this leads to a systematic bias in favour of large investors and hedge funds who are the ones with resources sufficient to win the arms race.

Note, that after HFT, the market value synchronizes faster by a short interval of time. Maybe there is an argument that this leads to a large absolute gain in some form by the way it affects investors decisions, but I dont see how it does.