100% this. It would be one thing if the only LSPs you could build came from Microsoft, but that’s just not true. It’s just that developing LSPs isn’t free.

Cursor, Windsurf, etc. are building multi-billion dollar businesses off the backs of the work that the VS Code team has done. And that’s totally fine! What’s not fine, is trying to have access to the whole ecosystem of first party extensions that aren’t MIT licensed.

I agree there should be more resilient extension repos, but this is one of the problems Eclipse Theia [0] has tried to take on, but most projects just fork the core VS Code experience and slot in OpenVSX rather than doing the hard, expensive work of building their own extension marketplaces or LSPs. And you know what, for a community or OSS fork, I think that’s fair. I think when you raise hundreds of millions in funding, you can build your own LSPs and start to maintain your own infra for extensions. And if you’ve got enough buy-in, you can probably convince developers to submit directly to your marketplace too.

And it isn’t even a rug pull, per se. The first changes to the license on some of the 1P VS Code extensions probably happened in late 2018 or early 2019, with remote share. The LSPs may have changed later. If anything, the Code team was probably too lax about letting the commercial forks use their resources wholesale against the license terms for as long as they did.

Disclaimer: I used to work at Microsoft and then at GitHub with things that touched VS Code. I now work at Google, who uses VS Code (well Monaco) inside some of our editors/products, but I don’t work on any of those.

[0]: https://theia-ide.org/

> There is no reason we should expect Microsoft to invest tens of millions of dollars into a product development and give it free for competitors like Cursor. That's not just rational, even for companies that are not Microsoft.

It's an "open source" IDE. It costs nothing. All of the money they make from it is on top of the integrations like Azure Devops and Github that would make just as much money (if not even more thanks to vibe coding increasing accessibility) in Cursor, Windsurf, and VSCodium. Microsoft isn't a charity and they've been investing those tens of millions of dollars for a reason: to get a return. That's fine, that's what capitalism is (like it or not).

What's not fine is their schizophrenic approach to open source that looks very much like the classic Micro$oft embrace, extend, extinguish*. They're literally trying to extinguish competitors that are doing better than them by restricting the ecosystem after supposedly and ostensibly embracing open source. I lived through the IE6 era and this doesn't feel much different. Same player, slightly different game.

It's probably driven by some politically powerful PM or VP who perfectly resembles the Dilbert principle. Just like the degradation happening in the Windows OS front, it's just Conway's law happening all over again.

* Which if I may remind everyone, is a phrase straight out of the DOJ's discovery. Microsoft came up with the term.