The error message is somewhat confusing. But there is an error in your connection properties. You have specified SQL Login, and SQL logins are usually not email addresses. Presumably you intended to login with Microsoft Entra. Change the Authentication type.
Error Setting Up Azure Data Studio for Azure SQL Database
Intellica Insights
20
Reputation points
A setup is being performed for Azure Data Studio on the desktop to access and update a SQL database on the Azure portal. Direct login to the database using an ID ending with outlook.com works on the Azure portal(portal.azure.com). However, when attempting to set up the connection on Azure Data Studio, an error occurs: "Cannot open server 'outlook.com' requested by the login. The login failed."
Screenshot are attached. Guidance on resolving this issue is requested.