From my interaction with Google recruiters, I can tell that by not knowing anyone at Google I am unfit to work at Google. This reminds me of the classic Economist article on the topic of teacher credentialing that shows a picture of Einstein with the caption “unfit to teach.” A hiring heuristic that gives massive preference to internal referrals means you’ll throw away some of the best candidates.
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Good people who don’t have internal connections do apply for jobs. But finding those great candidates among the crowd is not easy. Reviewing every resume is not possible, so it’s hard to sort the good from the bad, so a common trend is to increase the importance of internal referrals. This is dangerous.