I know that perception of Microsoft will never go away in the open source community, and maybe it shouldn’t, although I’m not convinced Microsoft of 2022 is particularly worse (or particularly better) than most other companies operating simultaneously in open source and proprietary spaces.
The context of “embrace, extend and extinguish” has kind of been diffused over the years, though; it never meant “buy a product and kill it,” but rather meant adopting open standards and adding proprietary (not necessarily closed, which is not the same thing) extensions to them that end up becoming de facto standards, so your product is perceived as better at the task then the fully standards-compliant original. What happened with Visual Studio Code and Atom isn’t an example of this at all. For a start, they’re just two products that are competing in the same space; they’ve never had the same extension standards, so the idea of “embracing and extending” just isn’t relevant here.
Secondly, Microsoft obviously didn’t buy GitHub to shut Atom down. I’ve seen the arguments that once Microsoft did buy GitHub, Atom was doomed, but Code was already arguably more popular than Atom when Microsoft bought GitHub in 2018: Stack Overflow’s developer survey showed VSCode as far more popular among surveyed users (34.9% to Atom’s 18.9%). If those numbers had been reversed—if Code never made a real dent and Atom kept growing—then I have little doubt Atom would be the one continuing.
Lastly, I suspect the runaway popularity of Visual Studio Code is pretty good insurance against a hypothetical “Visual Studio Code Pro” replacing the existing VS Code. This would almost certainly cause a fork (or more than one!) to be created, and it’s highly likely such a fork would get immediate backing and support from one or more technology companies willing to pay for continued open source development.
However, I don’t think that’s likely, because I don’t think that’s how Microsoft is interested in monetizing Code. It’s not a source of income in and of itself. It doesn’t have to be. If it just so happens to have great GitHub integration, maybe your company will pay for GitHub enterprise features. If you’re used to using it, you may be more likely to pay for GitHub Codespaces. If it has a great story for deploying to Azure, then maybe you’ll be more likely to deploy to Azure. And so on.