I sometimes feel like those algorithmic challenges at interviews are more for making developers feel they work at the "top team" than filtering the candidates. I am not salty about it - I am very good at those, did lots of Topcoder back in the day.
Most of the people in the industry agree that they have a terrible signal-to-noise ratio (or any other standardized interview method for developers). Any method that works doesn't scale, but large IT corps don't want to hear that.