The Gitlab editor has been very useful but it would be nice if it also started using VSCode. It would offload the editor development and offer more consistency and features from a well-tested product.

Considering a lot of the reason people use GitLab is to move away from MSFT, I think it's unlikely they'll switch to Code.

That's a silly reason to justify a worse product. And I've yet to see what company has switched away from Github purely because of Microsoft's acquisition.