Microsoft to Open Source GitHub Copilot Chat Extension and Integrate AI Features into VS Code Core

At the Build 2025 conference, Microsoft announced a significant move to open source the code behind the GitHub Copilot Chat extension under the MIT license in the coming months. This decision will also see core AI capabilities refactored directly into the main Visual Studio Code (VS Code) codebase, potentially reshaping the competitive landscape for AI-powered code editors. Microsoft cited several motivations for this step, including the rapid advancements in large language models, which have diminished the value of proprietary prompting strategies, and the increasing difficulty of keeping prompts secret due to community transparency efforts. The change also responds to requests from extension developers who have needed deeper integration with VS Code than the current public APIs allow. Previously, only extensions using unstable ‘Proposed APIs’ could access certain features, pushing some teams to fork VS Code. With the Copilot Chat extension moving to an MIT license and its features integrated into VS Code core, Microsoft aims to foster greater transparency, enable community-driven security improvements, and make VS Code an ‘AI-native editor’ by default. Developer reactions have been largely positive, highlighting opportunities for integrating local AI models and expanding community contributions. Microsoft also announced plans to open source the Copilot suggestion functionality, and revealed other new tools like a native TypeScript compiler port and a lightweight open-source command-line editor called Edit.