When you interview at Google, I think you're told 'dress as you're comfortable'. But really that's bad advice, as if you're most comfortable in a suit and wear that you're going to be getting it wrong.
It would be more fair if they said 'most people wear jeans and hoodies'. 'Wear whatever you want' is what they want to be but not the reality. 'Wear a hoodie' is the reality.
Genuinely curious. Are you saying that if you wear a suit to an interview at Google, you're going to be automatically dinged and not hired because of what you're wearing? I admittedly don't interview candidates for engineering positions at my company, but I can't imagine marking someone down for wearing a suit even though you basically never see anyone in a suit day-to-day in the office.
I don't think there's literally a box on the feedback form that says 'were they dressed appropriately', but I think it's part of the impression people will form of you and will judge you by.
But, no, I don't think I've ever heard someone comment about an individual being "overdressed" in a negative way. But then I don't work in Silicon Valley.
In that specific case the candidate might not have been hired, anyway, they were pretty marginal. But it is 100% a real thing that Bay Area tech people will ding you for wearing a suit to an interview.