Here's a good explanation posted by "tedsanders" the last time this came up on HN:

""" All of these claims from Google that say competition performance hurts or that GPA doesn't matter are missing one huge thing: selection bias.

Google only sees the performance of the employees that it hires, not the performance of the employees that it doesn't hire. Because of this, the data they analyze is statistically biased: all data is conditioned on being employed by Google. So when Google says things like "GPA is not correlated with job performance" what you should hear is "Given that you were hired by Google, GPA is not correlated with job performance."

In general, when you have some thresholding selection, it will cause artificial negative correlations to show up. Here's a very simple example that I hope illustrates the point: Imagine a world where high school students take only two classes, English and Math, and they receive one of two grades, A or B. Now imagine a college that admits students with at least one A (AB, BA, or AA) and that rejects everyone without an A (BB). Now imagine that there is absolutely zero correlation between Math and English - performance on one is totally independent of the other. However, when the college looks at their data, they will nonetheless see a stark anticorrelation between Math and English grades (because everyone who has a B in one subject always has an A in the other subject, simply because all the BBs are missing from their dataset).

When Google says that programming competitions are negatively correlated with performance and GPA is uncorrelated with performance, what that likely means is that Google's hiring overvalues programming competitions and fairly values GPA. """

I've also heard people involved in Google's Code Jam competition say that Norvig's study was done a long time ago, and no longer really applies.