The problem is: what's the realistic alternative? Just letting cheating happen is also unfair (to students who fail while the cheater passes). And finding out what exactly happened is not viable because students lie. We used to try to do that in the past, but the majority of the time all parties involved act as outraged and say they wrote the code and don't know what happened. Some students are very good actors, many others aren't, but even when you face the latter, your impression that they are lying is not proof that you can use in a formal evaluation process and would withstand an appeal.

So yes, it can be unfair, but it's the lesser evil among the solutions I know.

On the other hand, even if I am very confident that a student didn't write the code because they clearly don't understand it (which is often the case), this is difficult to uphold if the student appeals. For better or for worse, the greater accountability in grading and the availability of appeal processes means that you need to have some kind of objective evidence. "It was written in the rules that duplicate code would not be accepted, and this is clearly duplicate code" is objective. "I questioned both students and I found that this one couldn't correctly explain how the code works, so I'm sure he didn't write it" is not.

Note that I do this kind of questioning routinely (not only when cheating is involved) and take it into account in grades, because it of course makes sense to evaluate comprehension of the code... but outright failing a student on the grounds of an oral interview can easily get a professor into trouble.

You can ask “tricky” questions that someone who understands the material shouldn't have a problem answering, such as “if the problem required you to also do this, how would you change your code?”.

"I questioned both students and I found that this one couldn't correctly explain how the code works, so I'm sure he didn't write it" is not.

Fair enough. But at least you can give a bad grade for not understanding the course material.

People that don’t cheat may benefit in the future for not doing so.

I said May here because I generally found university education to be useless for myself. Instead, I wish I had met folks I consider mentors at work, earlier in my life.

This makes sense in the justice system, but in the justice system you often can find proof as to what happened, so the system still acts as a deterrent even if a fraction criminals get away with no punishment. In university assignments, most of the time it's practically impossible to find evidence of who copied from whom, so applying that principle would basically mean no enforcement, that everyone would be free to cheat and assignments would just not make sense at all.

Also, failing a course is far from such a big deal as going to jail or paying a fine. At least in my country, you can take the course again next year and the impact on your GPA is zero or negligible. You will have an entry in your academic record saying that you failed in the first attempt, but it won't be any different from that of someone who failed due to, e.g., illness.

If the consequences were harsher (e.g. being expelled from the institution, or something like that) then I would agree with you.