The ones that don't have any other options will stay ( you retain a higher percentage of people who are not top performers ), the rest that you would want to keep leave ( the best employees can just get another remote job right away )
This is the classic problem with voluntary buyouts and other discretionary layoffs - you only keep the people without other options.
They're wrong to equate being remote with not producing value. If people are not producing value for the company, sure, fire them. If they are doing well, then why force them to relocate? What's the business sense in that?
They have $X in their budget. If the remote employees are producing $Y value, where $Y>$X, then they are earning their keep. But suppose Yahoo believes they can yield 1.5Y for the same $X budget by having on-site workers?
It's not like companies are (or should be) altruistic democracies. I can see why a person affected by this would be sore, but they don't really have a valid gripe IMO. I'm personally a fan of at-will employment.
So are on-site employees, who can screw off just as much as an off-site one.
if the remote employees are not providing enough value to justify that investment in remote workers
Then fire them. This kind of draconian move won't get Yahoo anything but an even bigger talent hemorrhage than it already has.