All US listed options must be executed on an exchange.
There may be exceptions for a process in which large dealers can trade large quantities directly against each other but the trade would still get reported on the exchange (not 100% clear on this, but pretty sure something like this exists).
Volume is dominated by MMs. Retail traders will not be trading against each other the vast majority of times, probably not even for the most liquid options.
Computers per se may not favor MMs, but the process of bringing a trade to the exchange and executing it might favor MMs (and probably does).
There is a kind of auction process that happens but the specific fee structure and process probably favors MMs.
Some of the links in the post below have more detail. But it is an opaque (usually a bad sign) market and difficult to find good, publicly available explanations on how it works exactly.