I'm not saying that it's good to fire people. And yes, companies have levers to retain their strongest staff. I'm not convinced that they tend to be very good at doing that though.

The (non-FAANG) company I work for has an on-going hiring freeze, and I'm actually quite concerned because the only people who are leaving are the people you wouldn't want to leave - and none of the people you would want to leave are doing so.