On June 30, Microsoft unveiled its strategic decision to release the "Copilot Chat" extension as open source under the permissive MIT license.
In a statement on the team's official blog, the company said the move is a direct response to the growing demand within the developer community for greater transparency in how AI tools operate, particularly concerning data collection and prompt engineering.
In this context, any developer can now review the entire source code to understand the extension's inner workings—from the base prompts that guide the system to the mechanisms for collecting telemetry data.
The company noted that all operational details are now fully transparent and invited the developer community to contribute their insights and modifications on GitHub.
The announcement aligns with the vision Microsoft CEO Satya Nadella shared at the "Build 2025" conference.
During the event, Nadella affirmed the company's commitment to integrating AI capabilities directly into the core of VS Code, making them an inseparable part of the open-source environment relied upon by millions of developers worldwide.
Furthermore, Erich Gamma, a co-creator of VS Code, explained that this decision serves institutions that are hesitant to use closed-source software, making the editor an ideal choice for them.
Although this step opens the door wide for developers, some parts of the Copilot ecosystem remain proprietary, most notably the code autocompletion service and the back-end infrastructure that runs the language models.
However, Microsoft has promised to merge the autocompletion functionality into the open-source chat extension in the coming months.
In a parallel move, Microsoft also intends to open-source its infrastructure for prompt testing.
The goal is to help third-party extension developers build and test their tools with efficiency and stability, ensuring compatibility with the core ecosystem.
This significant shift places Microsoft in a strong position within the competitive landscape of intelligent programming tools, especially as other alternatives seek to offer similar experiences.
It appears the company is fully prepared to reshape the relationship between developers and artificial intelligence—this time, on its own terms and in an arena open to all.
