I mean that literally. As an example see this [0] discussion from a few days ago. Not involving microsoft, but the guy literally gave up millions just because of morals. The principal is the same.

[0]https://news.ycombinator.com/item?id=15372048

My surprise wasn't at the fact that someone would give up money due to morals; my surprise was at the fact that helping Microsoft (or putting ads in software, in VLC's case) would be considered a moral wrong. That sounds like quite an exaggeration to me. Microsoft has done a lot of good things too, and so have ads. The fact that they have negative aspects doesn't mean anything less than 90 degrees away from their direction is a moral wrong.

In VLC's case, it's a question of trust. The users of VLC trust the developer to not put ads on that software; it's breaking that trust that would be the moral wrong, not necessarily the ads.

I don't understand what notion of trust this is. If it auto-updates, maybe? But if you make the change clear before they update I don't see where there's a breach of trust.