There's four excellent examples of things that were better 10 years ago before this practice was instituted. The youngest thing on that list (chrome) is 14 years old.
Both Apple and Google used to not hire in this 3-4 interviews of canned programming question way. Then they did. Those products are now stagnating and deteriorating so much that it's obvious to everyone.
If you think it's exclusively a FAANG practice, you're mistaken. There's tiny firms that do it and really large ones that don't.
Bringing the worst practices of standardized testing into the tech hiring process produces the same kinds of problems that standardized testing does elsewhere. Silicon Valley used to be better than this.
It's a dumb arbitrary ceremony - might as well be a physical challenge from Nickelodeon's Double Dare.
(Also your narrative history is wrong, but that's not the point)