I don't use VSCode for the exact reason. I used VSCodium but switched to Neovim.
I see this problem more with GitHub (also owned by Microsoft). I was not able to get off GitHub yet, but I'm planning to switch to Codeberg probably. I heard that GitLab is also closed source?
Gitlab is open source, but some features are only available in their Enterprise Edition. As the name suggests, unless you are looking for an alternative for a large company, the open source "Community" Edition is enough for all your needs.
I am also facing the same issue with Github and switching to codeberg. My first hurdle is clouflare pages not sourcing codeberg for website source, only giving options for github and gitlab