Bernard Arnault's Shaky E Empire

When luxury king Bernard Arnault set up Europe's biggest Internet investment fund last summer, he looked ready to build a powerful empire in cyberspace. By taking stakes in dozens of Web startups, the French tycoon planned to create an integrated group of companies called Europ@web that would rival foreign giants such as Softbank and CMGI Inc. But now those dreams look as flat as a day-old glass of Moet & Chandon champagne. Several key Europ@web ventures have failed to meet expectations. In late June, Arnault pulled the plug on a planned listing of Europ@web, saying he was considering "strategic alternatives."

Fine--but what alternatives? Arnault, chairman of LVMH Moet Hennessy Louis Vuitton, hasn't spoken publicly about Europ@web since he canceled the initial public offering. Clearly, though, he is at a difficult crossroads. Arnault has made one of the boldest individual gambles ever on the Internet--putting nearly $500 million of his personal fortune into Europ@web while separately investing more than $300 million in other Web companies. Should he spend even more, change course, or get out? His decision will be closely watched as a bellwether of investor sentiment on Europe's Internet economy.