Earlier quoted context omitted.
And nobody ever seemed to say "hey, maybe we should be using something more secure". Yahoo's been around for how many decades, and the fact they were still using MD5 in 2013 is just shameful. Yeah if it was some legacy code from 1993 you can probably excuse it, but I just can't believe after 20 years nobody thought it was a problem. I'm not really a software developer but I really can't imagine it being a huge change…
Well, you can only rehash if you have the plaintext password. So you have to wait until they login again, or force a password reset for everyone. In the former case you're stuck with a bunch of md5 passwords hanging around for any account that's not very active, and for the latter you'll lose some percentage of active accounts whose reset process is for some reason no longer functional. You could mix-and-match the tw…
Somewhere in the organization, a product team is going to throw a fit about usability and churn over the decision to reset user passwords en masse, or to force users to change them when they first log in. This isn't a slight against product managers, but one of the clearest indications of a company's overall security culture "health" is how the security, engineering and product teams choose to compromise and "pick their battles." Risk accepting vulnerabilities has a legitimate place when you have to balance product development and usability, but so does pushing back on egregious issues.
I don't have privileged insight into Yahoo's organization, but in this case it's pretty clear the security team should have either been more diligent in conveying the ramifications or less kneecapped by the surrounding org units, depending on the circumstance. More importantly, Yahoo should have "migrated" their passwords in the manner a parallel comment explains in this thread. This is what Facebook and other companies did after maturing their security programs (see "Facebook Onion" on how Facebook transitioned away from MD5).
Also good to note - there is evidence Yahoo's security culture improved over the years. The decision to go with MD5 almost certainly happened in the 90s, and when Tumblr suffered a breach all users were forced to reset their passwords. The capability and awareness was clearly there.