This is a screening interview. It's at the top of the recruitment funnel. The alternative is seeing fewer candidates (because you can't have engineers do non-stop interviews) or just filtering heavily based on CVs. Neither option is good.
Which as yanyu says is a signal the company isn't "willing to spend the effort, time, and money to provide a good recruiting process, [which is] a huge red flag for the kind of candidates you want and the kind of employee experience you provide".
Which circles around and creates even more incentive for good candidates not to participate.
There's no doubt a market on both sides for hiring mediocre candidates. Approximately everyone has a job after all, not just the best people, but a tool like this is clearly optimizing for that not for excellence.
[1] See the excellent description of why this is problematic as a candidate who values your own time here: https://news.ycombinator.com/item?id=45801853
And to be clear, I think hiring today is completely broken already. This kind of thing is just one more step in the direction of marginalizing people who are already struggling to find work. In an already broken hiring system, these approaches to "save engineering time" or "drive a more efficient hiring process" exacerbate the divide between those who have jobs and those who are desperate to get a fair shot, and that’s what feels truly dehumanizing.