Thanks for the interest in this topic and I apologize for not commenting sooner, I’ve been on vacation and just getting through my backlog. Let me try to provide more details behind our thinking here.
When we set out to open source our code base, we looked for common practices to emulate for our scenario. We wanted to deliver a Microsoft branded product, built on top of an open source code base that the community could explore and contribute to.
We observed a number of branded products being released under a custom product license, while making the underlying source code available to the community under an open source license. For example, Chrome is built on Chromium, the Oracle JDK is built from OpenJDK, Xamarin Studio is built on MonoDevelop, and JetBrains products are built on top of the IntelliJ platform. Those branded products come with their own custom license terms, but are built on top of a code base that’s been open sourced.
We then follow a similar model for Visual Studio Code. We build on top of the vscode code base we just open sourced and we release it under a standard, pre-release Microsoft license.
The cool thing about all of this is that you have the choice to use the Visual Studio Code branded product under our license or you can build a version of the tool straight from the vscode repository, under the MIT license.
Here's how it works. When you build from the vscode repository, you can configure the resulting tool by customizing the product.json file. This file controls things like the Gallery endpoints, “Send-a-Smile” endpoints, telemetry endpoints, logos, names, and more.
When we build Visual Studio Code, we do exactly this. We clone the vscode repository, we lay down a customized product.json that has Microsoft specific functionality (telemetry, gallery, logo, etc.), and then produce a build that we release under our license.
When you clone and build from the vscode repo, none of these endpoints are configured in the default product.json. Therefore, you generate a "clean" build, without the Microsoft customizations, which is by default licensed under the MIT license (note, i made this commit to help make this more clear).
I hope this helps explain why our Microsoft branded Visual Studio Code product has a custom product license while the vscode open source repository has an MIT license. Last, I apologize for the fact that the naming of “Visual Studio Code”, “VS Code” and the vscode repository are so similar, I think it contributed to the confusion.
Chris