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kills genuine businesses due to the monopoly position of the company “sponsoring” it.

While I agree with most of your point, since VS Code is open source, can't the commercial IDE makers just borrow the good parts and ideas from VS Code and make their products better?

Sure, it won't mean anything to the sort of people who won't use a paid product for any reason. But it might sway people who are on the fence. Hopefully in the long run that will keep the competitive ecosystem healthy, and not just run all the commercial alternatives out of business.

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