We got to be mature. Microsoft (and many other corporations) are a problem due to their unfair practices. But this is not a moral war against them, when we are not the problem. If we have vscodium, which is opensource and it has telemetry removed, which is the problem?
I would be happy if they didn't made the internet a worse place, if they weren't greedy billionaire assholes, if they didn't have a monopoly, but vscode does not affect my sleep.
Cybersec researcher here. The content of your chat is encrypted end to end. Their servers can't read what you write. This is because they use the same protocol as signal, x3dh and double ratchet. However, they can and will collect everything else. Contact info, for example, phone, etc