Thread:VisualEditor/Feedback/MSUpload extension intergration?/reply

It's more complicated than that, because we need to keep track of copyright-related information.

They do have some plans to integrate image uploading at some point in the future. However, it may not happen this year.

On a related point, the image (formatting, not uploading) dialog has changed quite a bit in the last week, so you might want to have a look while you're here.