but some of the Atom devs are now working on Zed

Ok... but just because someone's working on an alternative doesn't mean that alternative will be able to unseat VSCode. Microsoft is spending tens of millions per year to gently lock people into VSCode.

The thing is that many developers are a vengeful bunch who hate big corps with their enshittification fetishes and love open source solutions. Microsoft has to tread really carefully here.

And they have been treading carefully for decades, and it's working. The people who supposedly hate big corps mostly use GitHub and VSCode. They're heating the water very, very slowly, and the frogs are staying in the pot.