This is what happens when you build software on another company's platform. Why put your time making plugins for VS Code when rug can be pulled from under any time?
Because VSCode is a huge step forward for the vast majority of people.
For example, it took the might of Microsoft to force everybody onto a Language Server Protocol which is how things should have been done everywhere but nobody wanted to work together to implement it until they were forced to by VSCode eating their market share.
As a further example, VSCode is sweeping aside a whole bunch of absolutely garbage embedded programming environments, and I assure you nobody is crying any tears for them.
Furthermore, if you make your own plugin and distribute it, Microsoft can't pull the rug out from under your plugin. The core of VSCode is open source.
Unfortunately, the most popular plugins are proprietary and Microsoft can and will rip the rug out from under people at some point.
However, the problem is that nobody is throwing the resources behind the open source plugins that Microsoft is throwing behind the proprietary ones. While I find the current situation distasteful, I also see it as "Pony money up or shut the hell up."
Sadly, the world of open source seems to be populated by a bunch of cheapass whiners. So, yeah, Microsoft gonna pwn.