Auto feels like a way for them to slightly push people towards paid models more. If they really favored Anthropic, claude would be the included free model, right?

On their roadmap (it's in the linked blog post https://code.visualstudio.com/blogs/2025/09/15/autoModelSele...):

> Let users on a free plan take advantage of the latest models through auto

It also describes how the auto selector works in more detail:

> When using auto model selection, VS Code uses a variable model multiplier based on the automatically selected model. If you are a paid user, auto applies a 10% request discount. For example, if auto selects Sonnet 4, it will be counted as 0.9x of a premium request; if auto selects GPT-5-mini, this counts as 0x because the model is included for paid users. You can see which model and model multiplier are used by hovering over the chat response.