Are long assessments just a scam to get free labor?

I had a start-up reach out to me. Prior to the interview I had to complete a long assessment essay.

The Essay question was very detailed and asked how you would merge a recently acquired health care company into the current start ups platforms, how you would secure all the data, what risks you could see or find. Etc.

A large integration plan with every step possible and all the risks you can think of.

This assessment took me 7 hours to consider everything and condense it into a 2 page plan (that was a requirement).

They denied me after a week of reviewing the plan.

I feel kind of scammed.