I find that very difficult to believe, as it’s very illegal to ask about disabilities during hiring. VMware as a large company with many lawyers and hr people would of course know the rules so I’d be shocked if this story is true.

Laws are not the same everywhere in the world. In France we have disabilities quotas, so it makes sense to ask about them during hiring. I also think suing someone because they didn't hire you is less of a thing.

You generally don't have to ask a person if they're deaf. Unless you mean it was part of the application/submission process? It sounds like a greatly exaggerated version of the truth, which is this:

The actual requirement for government contractors is that they cannot require someone to disclose disability information, but they must give the applicant the opportunity to do so.

Because roughly 10% of the workforce has a disability, and it was found that government contractors appeared to discriminate against people with disabilities that were otherwise qualified for the work. So, large contractors became obligated to have a less-than-representative 7% of their workforce pulled from a pool of candidates with disabilities.

I'm not sure quota systems like this are the best way to handle the problem. However, this approach is hardly the death knell for merit-based hiring.

There is this in France too. Over a certain size, a company has to have a quota of people with disabilities, or pay a tax.