My only guess is they have a parallel skunkworks working on the same thing, but in a way that they can keep it closed-source - that this was a hedge they think they no longer need, and they are missing the forest for the trees on the benefits of cross-pollination and open source ethos to their business.
Worked fine for MS with Excel supporting Lotus 123 and Word supporting WordPerfect's formats when those were dominant...
Meanwhile Excel was gaining features and winning users with them even before Windows was in play.
Ahhhh, your hindsight is well developed. I would be interested to know the background on the reasons why Lotus made that bet. We can't know the counterfactual, but Lotus delivering on a platform owned by their deadly competitor Microsoft would seem to me to be a clearly worrysome idea to Lotus at the time. Turned out it was an existentially bad idea. Did Lotus fear Microsoft? "DOS ain't done till Lotus won't run" is a myth[1] for a reason. Edit: DRDOS errors[2] were one reason Lotus might fear Microsoft. We can just imagine a narritive of a different timeline where Lotus delivered on Windows but did some things differently to beat Excel. I agree, Lotus made other mistakes and Microsoft made some great decisions, but the point remains.
We can also suspect that AMD have a similar choice now where they are forked. Depending on Nvidea/CUDA may be a similar choice for AMD - fail if they do and fail if they don't.
[1] http://www.proudlyserving.com/archives/2005/08/dos_aint_done...
[2] https://www.theregister.com/1999/11/05/how_ms_played_the_inc...