Yes they do. I've still got my Google 'Hire Squad' t-shirt somewhere (when you get trained on how to do interviews at Google you used to get a t-shirt) And they expect the interviewer to transcribe what you write on the white board into your feedback so that the hiring committee can read your notes and know what you're talking about.
You see the part you've missed here is that at Google, the person doing the interviewing has nothing at all with the person deciding if you should be hired. They interview you, using the techniques they were trained to use, they transcribe the whole thing like a court reporter, adding what color they can and a float between 0 and 4 (0 is 'run way', 4 is 'walks on water') And the then that goes into a 'packet' which gets sent to a hiring commitee where a different bunch of people read it (and the notes of everyone else) and they they decide if you are going to move forward in the process.
Writing syntax accurate code on the white board is always a plus. Although one candidate on seeing the dozen different color markers, wrote both syntax accurate and colorized code. That was good for a chuckle (and strangely I think it got them points in the committee).
Doesn't most of the personality of the person get lost in this setup? I mean, hiring people purely on technical merits may sound fine, but I'm not sure if that makes for a very pleasant working environment.
I think the whole hiring committee removes a lot of biases that people may have and the end result, in my opinion, is a workplace that's a lot more diverse than any other I've been at.