[BUG] Incident Report - Unable to use Claude Code inside VSCode for 2 days now

Preflight Checklist

• [x] I have searched existing issues and this hasn't been reported yet
• [x] This is a single bug report (please file separate reports for different bugs)
• [x] I am using the latest version of Claude Code

What's Wrong?

When I try to open Claude Code inside VSCode, it says, "Activating Extension" for a brief time and then nothing happens. I have already tried several things including uninstalling the Claude extension and VSCode and also restarted the system several times. It started 2 days ago and continues to be so.

What Should Happen?

Claude should launch inside VSCode.

Error Messages/Logs

Nothing

Steps to Reproduce

Launch Claude from inside VSCode

Claude Model

Not sure / Multiple models

Is this a regression?

Yes, this worked in a previous version

Last Working Version

_No response_

Claude Code Version

2.1.98 (Claude Code)

Platform

Anthropic API

Operating System

Windows

Terminal/Shell

Terminal.app (macOS)

Additional Information

_No response_