Yes, surprise firing is technically an option for almost all employees, including the long-term engineering staff talent at wealthy tech companies. It's reciprocal - the employee can quit with no notice also. A very very few public faces, world famous leaders in their field, will negotiate different deals - but the general long-term engineering staff isn't at that level.

I think it's not a point of competition, especially for the talent worth competing for, for several reasons:

1) People don't value the protection as much as they value the freedom of being able to quit, and you only get one or the other. Basically: "I'm good at my job, why do I need protection? But another offer might come along and I might want to leave."

2) People believe it won't happen to them / they have control over it. (I think this is generally true - don't do boneheaded things, keep being good at your job, you won't get fired.)

3) I prefer working somewhere that has the ability to fire bad coworkers. It leads to less bad coworkers.

4) Surprise firings are not really common, and when they do happen, the examples seem to make sense - people get fired for doing obviously bad things (or for being horrible, but that is usually a drawn out process and not the surprise described here.)

5) If you don't announce it, it will be difficult for your next employer to learn the circumstances, so you can always just get another job. (Companies in America tend not to answer questions about why prior employees left, it's mostly up to you to spin the story in the next interview. Most companies (in tech at least) don't even bother checking references because it's unlikely to be productive.)

6) The worst cases of fired-for-no-good-reason are already legally protected

If it was extremely common then this would probably change, but so far in my career it just hasn't seemed like a big concern.