Companies don't spend time thinking/rationalizing why they shouldn't raise current employees' salaries. They are simply forced to pay market rate for new hire, that's all, no one thinks about "what about our existing employees?"

Sometimes we romanticize tech company too much that we forgot that they are, at its core, just like any other company, and an engineer is just a headcount. Faang sometimes has the ability to steer away from that perception, but it remains true for almost all non-faang. Everyone below leadership is replaceable