That's the play when your adversary is regulation--the government moves slowly, court cases move even slower, and you can grease the wheels politically.

That is not the scenario here. Cursor is being hunted by an extremely motivated corporate competitor. Cursor has been leeching the gorilla's blood and the gorilla finally noticed. Microsoft doesn't (necessarily) need the law here. They have it if they need it, but they can kill Cursor without needing to sue them. The disastrous outcome isn't a penalty--it's a critical mass of users switching to Copilot because they can't use their Microsoft extensions in Cursor any more. Cutting off the extensions on the same day that their Cursor clone went live was effectively a declaration of war from Microsoft.

It's possible but I think this is a bit of a non-issue for cursor. Microsoft extensions are pretty good but are not irreplacable, and in the meantime cursor has grown astronomically fast and has grabbed a ton of "AI Coding" mindshare. I think the gamble has already paid off for them: if they have to play nice with licensing and develop their own solutions to replace MS proprietary extensions, they now have the scale to do that. GH Copilot was first in the game but now has the reputation of the poor man's cursor.

This would only be a major issue if most development tooling was controlled by Microsoft. There's a huge market for Cursor even without microsoft's C/C++ intellisense plugins and the open source community will adapt quickly if it's gone.

The risks around proxying to the marketplace are real but that doesnt seem to be an issue yet. It also continues lock-in to VSCode which benefits Microsoft so they might not care.

> The disastrous outcome isn't a penalty--it's a critical mass of users switching to Copilot because they can't use their Microsoft extensions in Cursor any more.

What will happen in this situation depends a lot on the "reputation" of Microsoft vs Anysphere (Cursor) and their "marketing":

If Anysphere's "marketing" wins, they mass of users will be very disgusted by Microsoft's moves that they will avoid it like the plague to touch basically any avoidable product of Microsoft (including in particular Github Copilot) again.

What cursor clone?