It certainly could be both! And I get what you mean, I always feel weird if I say something like that because it's not exactly what I mean but it's the best way I know to articulate it.
I'm sure every FAANG has dead weight, but I've always had the impression that in part due to the compensation the best of the industry tend to gravitate there. That certainly may have changed in the last decade when I think that idea got solidified in my mind.
There are plenty of middling engineers at FAANG-class companies. It is true that they have more rigorous standards and employ above average engineers, but that isn't the primary driver of the comp: these companies have to pay a premium to attract engineers in part because working at a huge (and in many cases unpopular) company isn't fun.
I'm sure every FAANG has dead weight, but I've always had the impression that in part due to the compensation the best of the industry tend to gravitate there. That certainly may have changed in the last decade when I think that idea got solidified in my mind.