diff --git a/extension/src/cli/dvc/discovery.ts b/extension/src/cli/dvc/discovery.ts
index c427cf2820..5a1b34fb64 100644
--- a/extension/src/cli/dvc/discovery.ts
+++ b/extension/src/cli/dvc/discovery.ts
@@ -127,10 +127,16 @@ const tryGlobalFallbackVersion = async (
   const tryGlobal = await getVersionDetails(setup, cwd, true)
   const { cliCompatible, isAvailable, isCompatible, version } = tryGlobal
 
-  if (isCompatible) {
-    setup.unsetPythonBinPath()
+  if (!isCompatible) {
+    return {
+      isAvailable,
+      isCompatible,
+      version
+    }
   }
 
+  setup.unsetPythonBinPath()
+
   return processVersionDetails(
     setup,
     cliCompatible,
@@ -152,7 +158,11 @@ const extensionCanAutoRunCli = async (
   } = await getVersionDetails(setup, cwd)
 
   if (pythonCliCompatible === CliCompatible.NO_NOT_FOUND) {
-    return tryGlobalFallbackVersion(setup, cwd)
+    const globalResults = await tryGlobalFallbackVersion(setup, cwd)
+
+    if (globalResults.isCompatible) {
+      return globalResults
+    }
   }
 
   return processVersionDetails(
diff --git a/extension/src/setup/runner.test.ts b/extension/src/setup/runner.test.ts
index 3e4c73642c..bb86861afb 100644
--- a/extension/src/setup/runner.test.ts
+++ b/extension/src/setup/runner.test.ts
@@ -485,8 +485,9 @@ describe('run', () => {
     await flushPromises()
     expect(mockedWarnWithOptions).toHaveBeenCalledTimes(1)
     expect(mockedWarnWithOptions).toHaveBeenCalledWith(
-      'The extension cannot initialize because the DVC CLI version is incompatible.',
-      Response.SHOW_SETUP
+      'An error was thrown when trying to access the CLI.',
+      Response.SHOW_SETUP,
+      Response.NEVER
     )
     expect(mockedGetCliVersion).toHaveBeenCalledTimes(2)
     expect(mockedResetMembers).toHaveBeenCalledTimes(1)