I never said MS is doing any of those things. I even linked their TOS to show you very clearly what they're doing and not doing.
And MS has all the right to limit their marketplace to their own client too. After all, it is first and foremost, their service for their product specifically. It's like you're making an unofficial client for youtube.
I never said they shouldn't "have the right", I said they're open-washing. They act like VS Code is open source but the build they distribute is not and a lot of the functionality they add in through recommended plugins are both not open source and you're not allowed to easily download them from other plugins. Everything about VS Code is fauxpen source to the max.