diff --git a/src/vs/code/node/sharedProcess/sharedProcessMain.ts b/src/vs/code/node/sharedProcess/sharedProcessMain.ts
index c85b246c2a5..6a26fb9ad17 100644
--- a/src/vs/code/node/sharedProcess/sharedProcessMain.ts
+++ b/src/vs/code/node/sharedProcess/sharedProcessMain.ts
@@ -56,7 +56,7 @@ import { ICustomEndpointTelemetryService, ITelemetryService } from 'vs/platform/
 import { TelemetryAppenderChannel } from 'vs/platform/telemetry/common/telemetryIpc';
 import { TelemetryLogAppender } from 'vs/platform/telemetry/common/telemetryLogAppender';
 import { TelemetryService } from 'vs/platform/telemetry/common/telemetryService';
-import { supportsTelemetry, ITelemetryAppender, NullAppender, NullTelemetryService, getPiiPathsFromEnvironment, isInternalTelemetry } from 'vs/platform/telemetry/common/telemetryUtils';
+import { supportsTelemetry, ITelemetryAppender, NullAppender, NullTelemetryService, getPiiPathsFromEnvironment, isInternalTelemetry, isLoggingOnly } from 'vs/platform/telemetry/common/telemetryUtils';
 import { CustomEndpointTelemetryService } from 'vs/platform/telemetry/node/customEndpointTelemetryService';
 import { ExtensionStorageService, IExtensionStorageService } from 'vs/platform/extensionManagement/common/extensionStorage';
 import { IgnoredExtensionsManagementService, IIgnoredExtensionsManagementService } from 'vs/platform/userDataSync/common/ignoredExtensions';
@@ -295,7 +295,7 @@ class SharedProcessMain extends Disposable implements IClientConnectionFilter {
 		if (supportsTelemetry(productService, environmentService)) {
 			const logAppender = new TelemetryLogAppender(logService, loggerService, environmentService, productService);
 			appenders.push(logAppender);
-			if (productService.aiConfig?.ariaKey) {
+			if (!isLoggingOnly(productService, environmentService) && productService.aiConfig?.ariaKey) {
 				const collectorAppender = new OneDataSystemAppender(requestService, internalTelemetry, 'monacoworkbench', null, productService.aiConfig.ariaKey);
 				this._register(toDisposable(() => collectorAppender.flush())); // Ensure the 1DS appender is disposed so that it flushes remaining data
 				appenders.push(collectorAppender);
diff --git a/src/vs/platform/telemetry/common/telemetryUtils.ts b/src/vs/platform/telemetry/common/telemetryUtils.ts
index c282e64cf0d..85c0fbee4dd 100644
--- a/src/vs/platform/telemetry/common/telemetryUtils.ts
+++ b/src/vs/platform/telemetry/common/telemetryUtils.ts
@@ -122,7 +122,7 @@ export function supportsTelemetry(productService: IProductService, environmentSe
 	if (!environmentService.isBuilt && !environmentService.disableTelemetry) {
 		return true;
 	}
-	return !(environmentService.disableTelemetry || !productService.enableTelemetry || environmentService.extensionTestsLocationURI);
+	return !(environmentService.disableTelemetry || !productService.enableTelemetry);
 }
 
 /**
@@ -133,6 +133,10 @@ export function supportsTelemetry(productService: IProductService, environmentSe
  * @returns True if telemetry is actually disabled and we're only logging for debug purposes
  */
 export function isLoggingOnly(productService: IProductService, environmentService: IEnvironmentService): boolean {
+	// If we're testing an extension, log telemetry for debug purposes
+	if (environmentService.extensionTestsLocationURI) {
+		return true;
+	}
 	// Logging only mode is only for OSS
 	if (environmentService.isBuilt) {
 		return false;
diff --git a/src/vs/server/node/serverServices.ts b/src/vs/server/node/serverServices.ts
index 422370324f7..9db61e83f34 100644
--- a/src/vs/server/node/serverServices.ts
+++ b/src/vs/server/node/serverServices.ts
@@ -44,7 +44,7 @@ import { RequestService } from 'vs/platform/request/node/requestService';
 import { resolveCommonProperties } from 'vs/platform/telemetry/common/commonProperties';
 import { ITelemetryService, TelemetryLevel } from 'vs/platform/telemetry/common/telemetry';
 import { ITelemetryServiceConfig } from 'vs/platform/telemetry/common/telemetryService';
-import { getPiiPathsFromEnvironment, isInternalTelemetry, ITelemetryAppender, NullAppender, supportsTelemetry } from 'vs/platform/telemetry/common/telemetryUtils';
+import { getPiiPathsFromEnvironment, isInternalTelemetry, isLoggingOnly, ITelemetryAppender, NullAppender, supportsTelemetry } from 'vs/platform/telemetry/common/telemetryUtils';
 import ErrorTelemetry from 'vs/platform/telemetry/node/errorTelemetry';
 import { IPtyService, TerminalSettingId } from 'vs/platform/terminal/common/terminal';
 import { PtyHostService } from 'vs/platform/terminal/node/ptyHostService';
@@ -148,7 +148,7 @@ export async function setupServerServices(connectionToken: ServerConnectionToken
 	let oneDsAppender: ITelemetryAppender = NullAppender;
 	const isInternal = isInternalTelemetry(productService, configurationService);
 	if (supportsTelemetry(productService, environmentService)) {
-		if (productService.aiConfig && productService.aiConfig.ariaKey) {
+		if (!isLoggingOnly(productService, environmentService) && productService.aiConfig?.ariaKey) {
 			oneDsAppender = new OneDataSystemAppender(requestService, isInternal, eventPrefix, null, productService.aiConfig.ariaKey);
 			disposables.add(toDisposable(() => oneDsAppender?.flush())); // Ensure the AI appender is disposed so that it flushes remaining data
 		}
diff --git a/src/vs/workbench/services/telemetry/browser/telemetryService.ts b/src/vs/workbench/services/telemetry/browser/telemetryService.ts
index dcd2356e566..ac45112d126 100644
--- a/src/vs/workbench/services/telemetry/browser/telemetryService.ts
+++ b/src/vs/workbench/services/telemetry/browser/telemetryService.ts
@@ -14,7 +14,7 @@ import { ClassifiedEvent, IGDPRProperty, OmitMetadata, StrictPropertyCheck } fro
 import { ITelemetryData, ITelemetryService, TelemetryLevel, TELEMETRY_SETTING_ID } from 'vs/platform/telemetry/common/telemetry';
 import { TelemetryLogAppender } from 'vs/platform/telemetry/common/telemetryLogAppender';
 import { ITelemetryServiceConfig, TelemetryService as BaseTelemetryService } from 'vs/platform/telemetry/common/telemetryService';
-import { getTelemetryLevel, isInternalTelemetry, ITelemetryAppender, NullTelemetryService, supportsTelemetry } from 'vs/platform/telemetry/common/telemetryUtils';
+import { getTelemetryLevel, isInternalTelemetry, isLoggingOnly, ITelemetryAppender, NullTelemetryService, supportsTelemetry } from 'vs/platform/telemetry/common/telemetryUtils';
 import { IBrowserWorkbenchEnvironmentService } from 'vs/workbench/services/environment/browser/environmentService';
 import { IRemoteAgentService } from 'vs/workbench/services/remote/common/remoteAgentService';
 import { resolveWorkbenchCommonProperties } from 'vs/workbench/services/telemetry/browser/workbenchCommonProperties';
@@ -71,8 +71,17 @@ export class TelemetryService extends Disposable implements ITelemetryService {
 			// If remote server is present send telemetry through that, else use the client side appender
 			const appenders: ITelemetryAppender[] = [];
 			const isInternal = isInternalTelemetry(productService, configurationService);
-			const telemetryProvider: ITelemetryAppender = remoteAgentService.getConnection() !== null ? { log: remoteAgentService.logTelemetry.bind(remoteAgentService), flush: remoteAgentService.flushTelemetry.bind(remoteAgentService) } : new OneDataSystemWebAppender(isInternal, 'monacoworkbench', null, productService.aiConfig?.ariaKey);
-			appenders.push(telemetryProvider);
+			if (!isLoggingOnly(productService, environmentService)) {
+				if (remoteAgentService.getConnection() !== null) {
+					const remoteTelemetryProvider = {
+						log: remoteAgentService.logTelemetry.bind(remoteAgentService),
+						flush: remoteAgentService.flushTelemetry.bind(remoteAgentService)
+					};
+					appenders.push(remoteTelemetryProvider);
+				} else {
+					appenders.push(new OneDataSystemWebAppender(isInternal, 'monacoworkbench', null, productService.aiConfig?.ariaKey));
+				}
+			}
 			appenders.push(new TelemetryLogAppender(logService, loggerService, environmentService, productService));
 			const config: ITelemetryServiceConfig = {
 				appenders,