A group of Israeli researchers explored the security of the Visual Studio Code marketplace and managed to "infect" over 100 organizations by trojanizing a copy of the popular 'Dracula Official theme to include risky code. Further research into the VSCode Marketplace found thousands of extensions with millions of installs.
Microsoft doesn’t have a vetting process for publishing extensions in the store. Maybe the failure is that people assume they do?
Surely you mean “that Microsoft does not make it clear that they don’t”?