Microsoft has clearly taken notice. They're already starting to lock down the upstream VSCode codebase, as seen with recent changes to the C/C++ extension [0]. It's not hard to imagine that future features like TypeScript 7.0 might be limited or even withheld from forks entirely. At the same time, Microsoft will likely replicate Windsurf and Cursor's features within a year. And deliver them with far greater stability and polish.
Both Windsurf and Cursor are riddled with bugs that don't exist upstream, _especially_ in their AI assistant features beyond the VSCode core. Context management which is supposed to be the core featured added is itself incredibly poorly implemented [1].
Ultimately, the future isn't about a smarter editor, it's about a smarter teammate. Tools like GitHub Copilot or future agents will handle entire engineering tickets: generating PRs with tests, taking feedback, and iterating like a real collaborator.
[0] https://www.theregister.com/2025/04/24/microsoft_vs_code_sub...
[1] https://www.reddit.com/r/cursor/comments/1kbt790/rules_in_49...
I actually find it a little reassuring that they can't seem to get out of their own way.
And I have long held that they are hungry, shipping like clockwork on or about the 20th of every month, showing up with actual improvements all the time https://about.gitlab.com/releases/ It seems this month brings 18.0 with it, for whatever that version bump happens to include
They also have a pretty good track record of "liberating" some premium features into the MIT side of things; I think it's luck of the draw, but it's not zero and it doesn't seem to be tied to any underhanded reason that I can spot