The main purpose of whiteboard is to decrease the liquidity of job search for engineers, thus depressing wages. After a few years of doing design docs and copying protobuf fields, the median engineer at a top company would need a month of prep to be able to pass whiteboard interviews again. Much more effective than secret no-poaching agreements.
While it may have the effect of decreasing job liquidity, I don't see how that effect could be the main purpose unless you believe companies are mass colluding. Because the company running the interview is highly motivated to find a good candidate quickly and reliably. A less intriguing but probably more accurate reason is that finding good people is hard, nobody really knows how to do it, whiteboard interviews provi…
http://www.latimes.com/business/technology/la-fi-tn-tech-job...
It was happening, only more blatantly than is suggested here. Of course they are all motivated to find good candidates, but they are also motivated to keep their existing folks. Decreasing liquidity and mobility serves the latter purpose at the expense of the former.