On a surface level, this is true. Vast majority of the code that makes VS Code is MIT licensed.
But the configuration of what marketplace is used and what extensions have access to the privileged "proposed API" makes huge difference in what Microsoft/GitHub can provide as user experience and what other developers can do.
I'd recommend looking into Logseq[0], it's free and open source and stores all notes on disk as Markdown. I version my notes with Git, but Syncthing will also work.
Isn't this like saying you need your own slack instance for your team? It should be IMO possible to limit conversation on mastodon to a group of people as an alternative to limiting it to an instance.