That’s absolutely not the same. An internship has a defined start and end date and you need to do something egregious not to make it to the end. In that sense it’s more like a short term contract than anything else and contractors get paid a lot more than salaried employees to compensate them for the risk involved.

Most internships are for hiring, not the labour the company gets from them. They function as three month long interviews but unlike a short term contract leading to hire it’s expected that they won’t immediately convert into a job as students return to university for another year. They’re also far more opaque to other employers on a cv. If someone did internships at three different companies over their degree they could have wanted to see many different companies or they could have performed below expectations at all three places. If you see their cv you won’t know.

It still sounds awfully similar. If you're firing ~30% of hires after the first month, then you're clearly treating it as an extended interview. And the first month of any job (in software, at least) includes a lot of training/ramp-up, so you don't expect to get much labor out of that period. The main difference is just that an internship has a several-month unpaid leave starting 3 months after hire.

I suppose it diverges more if you consider internships prior to the final one due to the weird optionality on following intern seasons, but I think that's a minority of internships due to the hiring goal (once you start looking at 2+ year lead-times before a potential full-time start date it becomes much harder to justify).

To be fair, we call it "contract to hire."