VSCode itself was a malicious move by Microsoft to capitalize on Atom's success, followed by the acquisition of Github and the beheading of Atom.
VSCode is "open source" with a walled garden of a marketplace. A quick look at how Microsoft is trying to kill competitors like Cursor (within the last week) by squeezing them out of the walled garden is... telling.
These moves by Microsoft are not made in the spirit of open source. It's in the spirit of EEE.
Big corporations are not monoliths, despite them having an overall singular personality. I believe that vscode was a sincere attempt, at least in the beginning. While based on electron which was originally developed for Atom, vscode was always much more performant than atom.
But when it did gain a lot of developer attention, MS's true nature took hold and gradually converted it into the walled garden we see today. It was more subtle in the beginning - a few useful extensions were proprietary and wouldn't work on non-MS builds of vscode for some unspecified reason. It was like a gentle nudge to the developers to migrate to their opaque proprietary builds. Of course, we have seen that before, haven't we?
As an aside, if you like vscode but hate the manipulation, you should give the Eclipse Theia editor [1] a try. It's an almost complete reimplementation of vscode and is compatible with the extensions from OpenVSX. I believe that they have fairer alternatives for collaborative editing, etc. At least, they will spare you the manipulation.
Now there's VSCode, TypeScript, WSL, Dapr and .NET, all open source.