> provided confidential mortgage pricing data from Fannie Mae to a principal competitor
It seems like the Fannie Mae data was shared with Freddie Mac. Aren't they both quasi-government organizations? GSEs. So they're both supported by the government but there's a firewall between them to keep some semblance of competition?
Having worked on this data since investors buy the loans, the loan level data by definition needs to be public. Even the borrower information is not secret because real estate ownership is public in USA. So I don’t understand what information it could possibly be other than fraud data. I think sharing fraud data is not colluding.
As called out elsewhere, workspace trust is literally the protection here which is being circumvented. You're warned when you open a folder whether you trust the origin/authors with pretty strong wording. Sure you may find this annoying, but it's literally a security warning in a giant modal that forces you to chose.
Even if automatic tasks were disabled by default, you'd still be vulnerable if you trust the workspace. VS Code is an IDE and the core and extensions can execute code based on files within the folder in order to provide rich features like autocomplete, compilation, run tests, agentic coding, etc.
Before workspace trust existed, we started noticing many extensions and core features having their own version of workspace trust warnings popping up. Workspace trust unified this into a single in your face experience. It's perfectly fine to not trust the folder, you'll just enter restricted mode that will protect you and certain things will be degraded like language servers may not run, you don't be able to debug (executes code in vscode/launch.json), etc.
Ultimately we're shipping developer tool that can do powerful things like automating project compilation or dependency install when you open a folder. This attack vector capitalizes on neglectful developers that ignore a scary looking security warning. It certainly happens in practice, but workspace trust is pretty critical to the trust model of VS Code and is also an important part to improve the UX around it as we annoy you a _single_ time when you open the folder, not several times from various components using a JIT notification approach. I recall many discussions happening around the exact wording of the warning, it's a difficult to communicate concept in the small amount of words that it needs to use.
My recommendation is to use the check box to trust the parent or configure trusted folders. I personally have all my safe git clones in a dev/ folder which I configured to trust, but I also have a playground/ folder where I put random projects that I don't know much about and decide at the time I open something.