After they uploaded their code to private repositories on GitHub, Bitbucket etc since forever?. They trust GitHub not to read their code but they don't trust an AI from Microsoft not to read it? It would be schizophrenia
I think that the reasoning is: they trust the git company (whatever it is) not to sell their code. They are worried that their code goes into a model and somebody else could ask the model "write a service like XYZ" and it will regurgitate their code.
GitLab even has a free self-hosted version, and it has a number of advantages (like being able to actually have a structure with inherited secrets and accesses, and no, GitHub Organisations do not count and suck). And for years thanks to GitLab-CI it was clearly ahead.