Big 4 do this routinely to check for conflict of interest as a result of audit regs.
When you apply to Google, they ask what other employment you have, IP you own, etc. Many companies do some variation of this, but I believe Google is one of the most restrictive on its employees.
Sure, if it's an employment that's standard procedure in every company i ever applied to ask/rule out if you would be employed by another company after start date. I was rather operating under the assumption when you're not employed / the owner but the ex-googler seems to have been an employee in a rivaling business in both cases which would have clearly violated his contract with google.
But this person would just lie and say no. The application isn't a lie detector.