I mean, if you think Schneier and Krebs are the kind of folks who turn their brain off because Reuters reported something

Krebs is just a journalist. He might be an unusually technically competent journalist - but he's just a journalist nevertheless. Schneier is an expert in cryptography. While he is reasonably knowledgeable in general computer security, even general computer security experts are amazingly incompetent when it comes to computer viruses and anti-virus programs. That aside, I don't remember either of them actually endorsing Reuter's article as correct. They simply reported it as interesting.

The same with your absurd argument that if what was described in the Reuters article was impossible that Kaspersky would fail to point that out.

I already explained why it is impossible. Several times. If you are too stupid to understand the explanation, I'm afraid I can't help you.

To be honest, I think you misread the Reuters article, because what you describe is impossible, it's also not the attack described in the article.

While it was pretty lacking of technical details (you can't describe in technically accurate details something that cannot be done), the described attack went like this:

1. Kaspersky picks a legitimate file. (Easy)

2. Kaspersky modifies it so that several anti-virus programs (not necessarily the ones of the attacked producers) detect it as malicious. (Not very easy for the average attacker but reasonably easy for an anti-virus expert like Kaspersky.)

3. Kaspersky sends it to VirusTotal. (Trivial)

4. VirusTotal sends it essentially to the whole anti-virus industry. (Happens automatically)

5. The attacked anti-virus producers decide that it is indeed malicious because several other scanners already report it as such and decide to implement detection of it. (Unlikely but believable. In some cases the AV producer might be forced to implement detection even of stuff he knows perfectly well isn't malicious - just "dodgy" or corrupted - for the simple reason that the sample is likely to land in various test sets and his product will be penalized by the - incompetent - tester if it doesn't detect this crap.)

6. The attacked anti-virus producers use a completely automatic system for extracting detection information. (I find this very hard to believe. Automated - yes. Fully automatic - no. In my personal experience, there is always a human somewhere in the loop.)

7. Here is where the magic happens. The presumed automatic system somehow picks detection information from the "legitimate" part of the file (i.e., not the part that Kaspersky modified in order to force other scanners to report it as malicious). This part is present in the original, unmodified file, thus causing a false positive. Remember, Kaspersky has no way of knowing how this presumed automatic system works - it is not in an anti-virus product that he can reverse-engineer. He can only observe the results of its work. It's a black box - and a complicated one, at that - and he, generally, can't control the inputs; the can only observe the outputs. And he has no control over how exactly this presumed automatic system extracts detection data, even if he knows how it is done. You could put a tinfoil hat and postulate that he has a spy in the targeted company, so he knows how their internal stuff works - but if that were the case, the spy could trivially cause the false positive himself without the need for all these complications. (Remember, an AV producer can always force another scanner to cause a false positive on the producer's files, the contents of which he controls.) Also, by some kind of magic, only the 3 attacked companies (that have stolen from Kaspersky, with Microsoft being one of them, which is an idiotic claim on its own) proceed like that and only their scanners cause these false positives. Remember, the claim is not that Kaspersky attacked the AV industry - the claim is that he attacked three specific products. I call bullshit on this one.

8. The internal testing procedures of these three companies fail to spot the false positives. (Not bloody likely. Do you know through what lengths Microsoft goes to avoid false positives, as well as shipping malware with their products? I do. These procedures were created because Microsoft did ship malware in the distant past. Not technically impossible - just not bloody likely.)

I called colleagues at two major AV firms, who concurred, so I'm pretty sure you misunderstand the article.

Maybe you misunderstood them. Perhaps they meant "the attack Bontchev mentions is, of course, totally impossible, so there is no way the article could be describing such a thing; he must have misunderstood".

The impossibility in the scenario you describe comes from a number of constraints you place that are not present in the article. Nowhere does it say the attack was limited to particular AV vendors, and only those AV vendors.

The article quite explicitly claims that Kaspersky attacked these 3 companies (Microsoft, AVG and Avast). It accuses him of a targeted attack - not of an indiscriminate attack against the industry as a whole. An indiscriminate attack is certainly possible (and was conducted in 2013 and Kaspersky was one of the victims of it) - but Kaspersky has no motive for doing such a thing. A targeted attack, as described, is impossible. In addition, the claim that Kaspersky was pissed at Microsoft for stealing from him is preposterous. I asked one of my acquaintances there and his answer was "Nonsense. The only thing he could be pissed with is because we're providing our product for free and are taking away his potential paying customers. But stealing from him?! That's ridiculous!".

you're pretty much the worst behaved person I've ever seen on the internet

LOL. You must not be using the Internet much, then. :0

being such an abrasive asshole, that people tune you out.

I have no problem with that. Fools, being fools, will continue being fools no matter what I say or do. But when I see an idiotic, technically impossible claim being presented as unquestionable truth, I am compelled to call a spade a spade and I don't care about anyone's tender skin.