Fix Enterprise Managed OTel Race in Copilot Extension

extensions/copilot/docs/monitoring/agent_monitoring.md

@@ -38,7 +38,7 @@ Open **Settings** (`Ctrl+,`) and add:
 }
 ```
 
-> **Note:** You can also use environment variables instead of VS Code settings (see [Configuration](#configuration)). Precedence is **enterprise policy > environment variables > settings**.
+> **Note:** You can also use environment variables instead of VS Code settings (see [Configuration](#configuration)). Applied policy is included in settings values, but environment variables can still override those values in this extension. See the [activation limitations](#activation).
 
 ### 3. Generate Telemetry
 
@@ -82,7 +82,11 @@ Open **Settings** (`Ctrl+,`) and search for `copilot otel`:
 
 ### Environment Variables
 
-Environment variables take precedence over VS Code settings, and **enterprise managed settings (policy) take precedence over both** — admins can centrally mandate any `github.copilot.chat.otel.*` value.
+Environment variables retain their existing precedence. When enterprise OTel configuration is
+recognized through the application-scoped policy defaults, the entire Copilot OTel settings
+block comes from those policy values and schema defaults. Personal `settings.json` values are
+not used to fill omitted fields: headers and resource attributes default to empty maps, not
+the user's maps. Other VS Code settings are unaffected.
 
 | Variable | Default | Description |
 |---|---|---|
@@ -102,9 +106,38 @@ Environment variables take precedence over VS Code settings, and **enterprise ma
 
 ### Activation
 
+When late enterprise OTel settings turn on external export after Copilot's telemetry service
+started without it, Copilot can restart the extension hosts for that window to recover. It shows
+a progress notification before requesting the restart; that notice clears automatically when
+the host restarts or the attempt ends. Successful recovery is logged without another toast.
+Restarting also interrupts other extensions in the window. If the restart is unavailable,
+vetoed, or fails to apply the settings,
+a warning offers **Reload Window** instead. User changes and policy withdrawal remain
+opt-in reloads. Exporter behavior and environment-variable precedence are unchanged.
+It uses changes to the application-scoped, policy-backed configuration defaults as a recovery
+signal, without a new API. Normal personal settings changes do not change those defaults.
+If a recognizable enterprise OTel block was already present at initialization, later changes
+only offer a reload, including enabling a previously disabled managed configuration.
+Automatic recovery additionally requires policy-enabled OTLP export targeting the collector in
+those defaults. Disabled and DB-only pipelines, unrelated partial policies, and configurations
+still redirected by environment variables to a different collector or file do not qualify.
+Policy edits indistinguishable from schema defaults cannot be identified as new policy and retain
+the opt-in reload behavior. Conflicting environment variables can still prevent recovery, and this
+does not enforce precedence over environment variables or guarantee telemetry produced before
+the restart. The default-value signal cannot distinguish a policy consisting entirely of
+schema-default values from no policy.
+
+There is no periodic polling or restart loop. A startup check and configuration events trigger
+checks, coalesced by a 500 ms debounce. At most one automatic off-to-on recovery is attempted per
+workspace and editor session, identified by `vscode.env.sessionId`. The attempt remains recorded
+even after success or failure. Later policy updates only offer a reload, deduplicated while stale.
+If policy first arrives after a later sign-in, that single recovery can happen then rather than
+immediately at launch. A one-off 15-second grace period allows a requested restart to finish
+before a still-running host shows the reload fallback.
+
 OTel is **off by default** with zero overhead. It activates when:
 
-- enterprise policy enables it (managed `telemetry.enabled` or a managed endpoint), or
+- an applied enterprise policy makes `github.copilot.chat.otel.enabled` true, or
 - `COPILOT_OTEL_ENABLED=true`, or
 - `OTEL_EXPORTER_OTLP_ENDPOINT` is set, or
 - `github.copilot.chat.otel.enabled` is `true`, or

extensions/copilot/package.json

@@ -5308,7 +5308,7 @@
             "policyReference": {
               "name": "CopilotOtelEnabled"
             },
-            "markdownDescription": "Enable OpenTelemetry trace/metric/log emission for Copilot Chat operations. Precedence: enterprise policy > env var `COPILOT_OTEL_ENABLED` > user setting. Requires window reload.",
+            "markdownDescription": "Enable OpenTelemetry trace/metric/log emission for Copilot Chat operations. Recognized enterprise OTel settings replace personal OTel settings, but env var `COPILOT_OTEL_ENABLED` can still override enablement. Requires window reload.",
             "tags": [
               "advanced"
             ]
@@ -5326,7 +5326,7 @@
             "policyReference": {
               "name": "CopilotOtelProtocol"
             },
-            "markdownDescription": "OTel exporter type for Copilot Chat telemetry. Configurable in user settings or managed by enterprise policy (policy takes precedence). Requires window reload.",
+            "markdownDescription": "OTel exporter type for Copilot Chat telemetry. Enterprise-managed OTel settings replace personal OTel settings. A configured output file, including env var `COPILOT_OTEL_FILE_EXPORTER_PATH`, can still select file export. Requires window reload.",
             "tags": [
               "advanced"
             ]
@@ -5344,7 +5344,7 @@
             "policyReference": {
               "name": "CopilotOtelOtlpProtocol"
             },
-            "markdownDescription": "OTLP wire protocol for Copilot Chat OTel data, mirroring `OTEL_EXPORTER_OTLP_PROTOCOL`. `http/protobuf` selects the protobuf-over-HTTP exporter; the default (empty) uses `http/json`. Precedence: enterprise policy > env var > user setting. Requires window reload.",
+            "markdownDescription": "OTLP wire protocol for Copilot Chat OTel data, mirroring `OTEL_EXPORTER_OTLP_PROTOCOL`. `http/protobuf` selects the protobuf-over-HTTP exporter; the default (empty) uses `http/json`. Env vars `OTEL_EXPORTER_OTLP_PROTOCOL`, then `COPILOT_OTEL_PROTOCOL`, take precedence over enterprise-managed or personal settings. Requires window reload.",
             "tags": [
               "advanced"
             ]
@@ -5356,7 +5356,7 @@
             "policyReference": {
               "name": "CopilotOtelEndpoint"
             },
-            "markdownDescription": "OTLP collector endpoint URL for Copilot Chat OTel data. Precedence: enterprise policy > env var `OTEL_EXPORTER_OTLP_ENDPOINT` > user setting. Requires window reload.",
+            "markdownDescription": "OTLP collector endpoint URL for Copilot Chat OTel data. Env vars `COPILOT_OTEL_ENDPOINT`, then `OTEL_EXPORTER_OTLP_ENDPOINT`, take precedence over enterprise-managed or personal settings. Requires window reload.",
             "tags": [
               "advanced"
             ]
@@ -5368,7 +5368,7 @@
             "policyReference": {
               "name": "CopilotOtelCaptureContent"
             },
-            "markdownDescription": "Capture input/output messages, system instructions, and tool definitions in OTel telemetry. **Contains potentially sensitive data.** Precedence: enterprise policy > env var `COPILOT_OTEL_CAPTURE_CONTENT` > user setting. Requires window reload.",
+            "markdownDescription": "Capture input/output messages, system instructions, and tool definitions in OTel telemetry. **Contains potentially sensitive data.** Env var `COPILOT_OTEL_CAPTURE_CONTENT` takes precedence over enterprise-managed or personal settings. Requires window reload.",
             "tags": [
               "advanced"
             ]
@@ -5380,7 +5380,7 @@
             "policyReference": {
               "name": "CopilotOtelServiceName"
             },
-            "markdownDescription": "OTel `service.name` resource attribute for Copilot Chat OTel data. Configurable in user settings only. Env var `OTEL_SERVICE_NAME` takes precedence over the setting; enterprise policy takes precedence over both. Requires window reload.",
+            "markdownDescription": "OTel `service.name` resource attribute for Copilot Chat OTel data. Env var `OTEL_SERVICE_NAME` takes precedence over enterprise-managed or personal settings. Requires window reload.",
             "tags": [
               "advanced"
             ]
@@ -5395,7 +5395,7 @@
             "policyReference": {
               "name": "CopilotOtelResourceAttributes"
             },
-            "markdownDescription": "Additional OTel resource attributes for Copilot Chat OTel data, as a `{ \"key\": \"value\" }` map. Configurable in user settings only. Merged per-key with `OTEL_RESOURCE_ATTRIBUTES` env (env wins over the setting); enterprise policy wins over both. Requires window reload.",
+            "markdownDescription": "Additional OTel resource attributes for Copilot Chat OTel data, as a `{ \"key\": \"value\" }` map. When enterprise OTel settings apply, personal OTel settings are ignored. Merged per-key with env var `OTEL_RESOURCE_ATTRIBUTES` (env values take precedence, including over enterprise-managed values). Requires window reload.",
             "tags": [
               "advanced"
             ]
@@ -5410,7 +5410,7 @@
             "policyReference": {
               "name": "CopilotOtelHeaders"
             },
-            "markdownDescription": "Extra OTLP exporter headers (e.g. auth tokens) for Copilot Chat OTel data, as a `{ \"key\": \"value\" }` map. Applied directly to the OTLP exporter, not via environment variables. Configurable in user settings only. Merged per-key with `OTEL_EXPORTER_OTLP_HEADERS` env (env wins over the setting); enterprise policy wins over both. **Contains potentially sensitive credentials.** Requires window reload.",
+            "markdownDescription": "Extra OTLP exporter headers (e.g. auth tokens) for Copilot Chat OTel data, as a `{ \"key\": \"value\" }` map. Applied directly to the OTLP exporter, not via environment variables. When enterprise OTel settings apply, personal OTel settings are ignored. Merged per-key with env var `OTEL_EXPORTER_OTLP_HEADERS` (env values take precedence, including over enterprise-managed values). **Contains potentially sensitive credentials.** Requires window reload.",
             "tags": [
               "advanced"
             ]
@@ -5432,7 +5432,7 @@
             "policyReference": {
               "name": "CopilotOtelOutfile"
             },
-            "markdownDescription": "File path for file-based OTel exporter output (JSON-lines). When set, overrides exporter type to `file`. Configurable in user settings or managed by enterprise policy (policy takes precedence). Requires window reload.",
+            "markdownDescription": "File path for file-based OTel exporter output (JSON-lines). When set, overrides exporter type to `file`. Enterprise-managed OTel settings replace personal OTel settings, but env var `COPILOT_OTEL_FILE_EXPORTER_PATH` can still override the output path. Requires window reload.",
             "tags": [
               "advanced"
             ]

extensions/copilot/src/extension/extension/vscode-node/services.ts

@@ -57,7 +57,7 @@ import { IFetcherService } from '../../../platform/networking/common/fetcherServ
 import { IToolDeferralService } from '../../../platform/networking/common/toolDeferralService';
 import { ChatWebSocketManager, IChatWebSocketManager } from '../../../platform/networking/node/chatWebSocketManager';
 import { FetcherService } from '../../../platform/networking/vscode-node/fetcherServiceImpl';
-import { resolveOTelConfig } from '../../../platform/otel/common/otelConfig';
+import { IOTelConfigResolver } from '../../../platform/otel/common/otelConfigResolution';
 import { IOTelService } from '../../../platform/otel/common/otelService';
 import { InMemoryOTelService } from '../../../platform/otel/node/inMemoryOTelService';
 import { IOTelSqliteStore, OTelSqliteStore } from '../../../platform/otel/node/sqlite/otelSqliteStore';
@@ -118,6 +118,7 @@ import { ILinkifyService, LinkifyService } from '../../linkify/common/linkifySer
 import { DebugCommandToConfigConverter, IDebugCommandToConfigConverter } from '../../onboardDebug/node/commandToConfigConverter';
 import { DebuggableCommandIdentifier, IDebuggableCommandIdentifier } from '../../onboardDebug/node/debuggableCommandIdentifier';
 import { ILanguageToolsProvider, LanguageToolsProvider } from '../../onboardDebug/node/languageToolsProvider';
+import { VSCodeOTelConfigResolver } from '../../otel/vscode-node/otelConfigResolver';
 import { IPowerService } from '../../power/common/powerService';
 import { PowerService } from '../../power/vscode-node/powerService';
 import { ChatMLFetcherImpl } from '../../prompt/node/chatMLFetcher';
@@ -293,34 +294,10 @@ export function registerServices(builder: IInstantiationServiceBuilder, extensio
 	const otelSqliteStore = new OTelSqliteStore(otelDbPath);
 	builder.define(IOTelSqliteStore, otelSqliteStore);
 
-	// OTel service — resolve config from env + settings, create appropriate impl
-	const otelSettings = workspace.getConfiguration('github.copilot.chat.otel');
-	const policyValue = <T>(key: string): T | undefined => (otelSettings.inspect<T>(key) as { policyValue?: T } | undefined)?.policyValue;
-	const otelConfig = resolveOTelConfig({
-		env: process.env,
-		settingEnabled: otelSettings.get<boolean>('enabled'),
-		settingExporterType: otelSettings.get<'otlp-grpc' | 'otlp-http' | 'console' | 'file'>('exporterType'),
-		settingOtlpEndpoint: otelSettings.get<string>('otlpEndpoint'),
-		settingCaptureContent: otelSettings.get<boolean>('captureContent'),
-		settingMaxAttributeSizeChars: otelSettings.get<number>('maxAttributeSizeChars'),
-		settingOutfile: otelSettings.get<string>('outfile') || undefined,
-		settingDbSpanExporter: otelSettings.get<boolean>('dbSpanExporter.enabled'),
-		settingProtocol: otelSettings.get<string>('protocol') || undefined,
-		policyEnabled: policyValue<boolean>('enabled'),
-		policyExporterType: policyValue<'otlp-grpc' | 'otlp-http' | 'console' | 'file'>('exporterType'),
-		policyOtlpEndpoint: policyValue<string>('otlpEndpoint'),
-		policyCaptureContent: policyValue<boolean>('captureContent'),
-		policyOutfile: policyValue<string>('outfile'),
-		policyProtocol: policyValue<string>('protocol'),
-		settingServiceName: otelSettings.get<string>('serviceName') || undefined,
-		policyServiceName: policyValue<string>('serviceName'),
-		settingResourceAttributes: otelSettings.get<Record<string, string>>('resourceAttributes'),
-		policyResourceAttributes: policyValue<Record<string, string>>('resourceAttributes'),
-		settingHeaders: otelSettings.get<Record<string, string>>('headers'),
-		policyHeaders: policyValue<Record<string, string>>('headers'),
-		extensionVersion: extensionContext.extension.packageJSON.version ?? '0.0.0',
-		sessionId: env.sessionId,
-	});
+	// Keep the exact resolution the service uses so late policy can be detected.
+	const otelConfigResolver = new VSCodeOTelConfigResolver(process.env, extensionContext.extension.packageJSON.version ?? '0.0.0', env.sessionId);
+	builder.define(IOTelConfigResolver, otelConfigResolver);
+	const otelConfig = otelConfigResolver.activeResolution.config;
 	if (otelConfig.enabled) {
 		// Dynamic import to avoid loading OTel SDK when disabled
 		const { NodeOTelService } = require('../../../platform/otel/node/otelServiceImpl') as typeof import('../../../platform/otel/node/otelServiceImpl');