Can you point to how? Pretty much all of the functionality Microsoft has made that is proprietary they’ve packaged inside extensions. The app itself works fine without those extensions.
I read some of that issue but it seems to be about OpenVSX, and one of the solutions was to try switching to the official extension marketplace, probably against ToS. That seems to not be sabotage.
Check out VSCodium, similar to Chrome/Chromium, it's just VSCode minus all the related Microsoft stuff.