diff --git a/src/vs/workbench/contrib/chat/browser/actions/chatActions.ts b/src/vs/workbench/contrib/chat/browser/actions/chatActions.ts
index d5aa998..dab534b 100644
--- a/src/vs/workbench/contrib/chat/browser/actions/chatActions.ts
+++ b/src/vs/workbench/contrib/chat/browser/actions/chatActions.ts
@@ -1876,3 +1876,3 @@ MenuRegistry.appendMenuItem(MenuId.EditorContext, {
 		ChatContextKeys.Setup.disabled.negate(),
-		ChatContextKeys.Setup.installed.negate(),
+		ChatContextKeys.Setup.installed,
 	);
diff --git a/src/vs/workbench/contrib/chat/browser/chat.contribution.ts b/src/vs/workbench/contrib/chat/browser/chat.contribution.ts
index dbd2125..bceed38 100644
--- a/src/vs/workbench/contrib/chat/browser/chat.contribution.ts
+++ b/src/vs/workbench/contrib/chat/browser/chat.contribution.ts
@@ -696,3 +696,3 @@ configurationRegistry.registerConfiguration({
 			description: nls.localize('chat.disableAIFeatures', "Disable and hide built-in AI features provided by GitHub Copilot, including chat, code completions and next edit suggestions."),
-			default: false,
+			default: true,
 			scope: ConfigurationScope.WINDOW
diff --git a/src/vs/workbench/contrib/chat/browser/chatParticipant.contribution.ts b/src/vs/workbench/contrib/chat/browser/chatParticipant.contribution.ts
index 391a4de..a1489b2 100644
--- a/src/vs/workbench/contrib/chat/browser/chatParticipant.contribution.ts
+++ b/src/vs/workbench/contrib/chat/browser/chatParticipant.contribution.ts
@@ -67,9 +67,8 @@ const chatViewDescriptor: IViewDescriptor[] = [{
 	ctorDescriptor: new SyncDescriptor(ChatViewPane, [{ location: ChatAgentLocation.Chat }]),
-	when: ContextKeyExpr.or(
-		ContextKeyExpr.or(
-			ChatContextKeys.Setup.hidden,
-			ChatContextKeys.Setup.disabled
-		)?.negate(),
+	when: ContextKeyExpr.and(
+		ChatContextKeys.Setup.installed,
+		ChatContextKeys.Setup.disabled.negate(),
+		ChatContextKeys.Setup.hidden.negate(),
 		ChatContextKeys.panelParticipantRegistered,
-		ChatContextKeys.extensionInvalid
+		ChatContextKeys.extensionInvalid.negate()
 	)
diff --git a/src/vs/workbench/contrib/chat/browser/chatStatus.ts b/src/vs/workbench/contrib/chat/browser/chatStatus.ts
index 05f6f0e..7fe62fd 100644
--- a/src/vs/workbench/contrib/chat/browser/chatStatus.ts
+++ b/src/vs/workbench/contrib/chat/browser/chatStatus.ts
@@ -132,2 +132,7 @@ export class ChatStatusBarEntry extends Disposable implements IWorkbenchContribu
 
+		const context = chatEntitlementService.context?.value;
+		if (!context) {
+			return; // disabled
+		}
+
 		this.update();