Right now, there's a growing list of AI IDEs based on VS Code, along with countless extensions that bolt AI features onto it. Some, like Cursor, have gone deep and modified VS Code itself. Most, however, just plug into its standard extension interfaces, which puts a tight leash on what their AI can actually do.
This move by Microsoft could shake things up in several ways.
First, it just got a lot easier to build serious alternatives to Copilot, Cursor, Windsurf, and the rest. With open access, developers can now replicate the deep IDE integration and simply swap the backend URL to point to their own implementation. Expect more competition, faster innovation, and, with luck, fewer clunky interfaces.
The VS Code community can now also take a crack at fixing the less-than-stellar UX of the current Copilot experience. Hopefully, we’ll see a UX that doesn’t feel like it’s stuck in beta. Cursor has already raised the bar, and now others can catch up.
Then there’s the local angle. With open-source access, swapping out the backend for a local model becomes feasible. That’s a big win for teams that can't or won't send code to external APIs. Think enterprise, regulated industries, or just people who don't trust the cloud not to snoop.
If multiple vendors converge on the same UI, we could finally get some standardization in how you interact with AI in IDEs. That means less time learning new tools and more time doing actual work.
It also opens the door to specialized agents tailored to specific tasks, such as one for UI design, one for documentation, and one for project management. Why settle for a generic coding assistant when you could have a finely tuned team of virtual interns?
Whatever Microsoft’s motivations were, this move has opened the door to a lot of promising developments.
Here is the link to the announcement: VS Code: Open Source AI Editor
