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Phoebe Gates Cookie Stuffing Scheme at Phia Startup Exposed — AI-generated representative image. A laptop shows an online shopping checkout page in a startup office, illustrating a report about a shopping startup's affilia

Editorial Team

Internal messages reportedly show co-founders knew about the affiliate fraud for months

Phoebe Gates, daughter of Microsoft co-founder Bill Gates, has been accused of knowingly operating a "cookie stuffing" scheme at her shopping startup Phia that allowed the company to collect commissions for sales it did not actually generate, according to a Bloomberg report published on Tuesday.

The report cites internal Slack messages and source code indicating that Gates and co-founder Sophia Kianni were aware of the practice for months, contradicting the company's earlier statement that it had only discovered the issue within 24 hours of an initial report last month.

The allegations carry serious legal implications, as cookie stuffing can constitute federal wire fraud, an offense punishable by up to 20 years in prison. The controversy also draws renewed attention to the business practices of a venture that attracted tens of millions of dollars from prominent Silicon Valley and celebrity investors during its first funding round.

The development matters because it raises questions about the integrity of affiliate marketing practices in e-commerce and about the oversight of startups backed by high-profile figures.

What the Internal Records Reportedly Reveal

Bloomberg reported that internal Slack messages and source code show Gates and Kianni had known about the cookie stuffing practice for months. In one December exchange, Gates reportedly asked developers to ensure automatic cookie drops were working across retailers so Phia could monetize "every transaction." Kianni later told engineers that "whatever we can do to keep these cookies dropping will be amazing."

The practice involved Phia's browser extension automatically inserting affiliate tracking cookies into online purchases, allowing the company to claim commissions even when shoppers had not used its coupons or links.

Background of the Startup and Initial Report

Phia, co-founded by Gates and fellow Stanford graduate Sophia Kianni, markets itself as a digital shopping assistant that finds cheaper products and discount codes. Despite Gates trying to distance herself from the "nepo baby" label and present the venture as independent of her billionaire father, the company immediately attracted tens of millions of dollars from prominent Silicon Valley and celebrity investors and was actively promoted by Bill Gates.

The controversy first erupted last month, when Bloomberg reported that the browser extension was automatically inserting affiliate tracking cookies. Phia responded by saying it had only discovered the problem within the previous 24 hours and described it as a software issue that was quickly fixed. The latest reporting directly contradicts that account.

Revenue Impact and Company Response

After the features were disabled in July, average daily revenue reportedly fell from about $80,000 to between $10,000 and $28,000. Phia claims part of the decline came from suspending other monetization tools and says it has begun reversing improperly attributed commissions while hiring a compliance chief.

The company has not directly addressed the allegation that its founders were aware of the practice for months, and it has not confirmed whether any legal action has been taken in response to the Bloomberg findings.

What Happens Next

The latest Bloomberg report has not indicated whether federal authorities have opened an investigation into Phia's practices. The company has stated that it is reversing improperly attributed commissions and hiring a compliance chief, but it has not addressed the specific claims about founder awareness.

Additional information is awaited regarding whether regulators or law enforcement will pursue the matter further.

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