Not malicious, but still selfish. It's important to remember that the copilot extensions are an extremely effective way of monetizing VScode. So it seems more like they're kind of compromising on their API usage rules in order to get to market quicker. But allowing themselves to use the APIs before anyone else is in a way anti-competitive, because the only way one could compete would be to use the unfinished APIs. But that requires users to go through more hoops to install your extension.

I should also mention that I am a VScode extension developer and I'm one of the weirdos that actually takes the time to read about API updates. They are putting in a lot of effort in developing language model APIs. So it's not like they're outright blocking others from their marketplace.