Phoebe Gates' Shopping App Accused of Cookie Stuffing Cover-Up

Introduction

A fresh investigation by Bloomberg has cast a shadow over Phia, the shopping startup co-founded by Phoebe Gates, daughter of Microsoft co-founder Bill Gates, and her Stanford roommate Sophia Kianni. The report alleges that the company's browser extension engaged in a practice known as "cookie stuffing" for months, with the knowledge and active encouragement of its founders, contradicting the company's earlier claim that the issue was a mere software bug.

The controversy centers on how Phia's extension allegedly injected affiliate cookies into users' browsers without their consent, thereby claiming credit for sales it did not actually drive. This practice, which violates the policies of major digital platforms, could have significant financial and legal repercussions for the startup.

The Allegations

According to Bloomberg's investigation, Phia's extension was designed to secretly open background tabs to inject its own affiliate code, overriding other referrals to secure commissions. Independent testing by Bloomberg, researcher Ben Edelman, and rival company Capital One Shopping reportedly confirmed this behavior. The practice, known as "cookie stuffing," is a violation of affiliate marketing rules and has previously led to legal action against other companies, such as PayPal-owned Honey, which faced a class-action lawsuit in 2024.

The new report, however, goes further, alleging that the feature was not an accident but a deliberate, controllable option named "enable coupon auto drop" on the company's internal dashboard. Citing internal Slack chats and anonymous sources, Bloomberg claims that Phoebe Gates herself was aware of the practice at least seven months before the initial report was published, and that she actively pushed for its inclusion.

Founders' Knowledge and Encouragement

The investigation presents a timeline that contradicts Phia's public stance. In December, Gates allegedly had a Slack conversation with staffers, expressing a desire to ensure that Phia was dropping cookies on all websites, even when shoppers did not use a coupon. This suggests that the feature was not a bug but a strategic, albeit unethical, approach to maximizing affiliate revenue.

Furthermore, the report details other questionable practices, including automatically dropping a cookie every two hours on "top 1000 websites" if a user had ever interacted with the extension, and dropping cookies when a shopper clicked anywhere after Phia's pop-up appeared, even if the click was intended to close the pop-up. These practices were allegedly implemented despite internal concerns about compliance.

An engineer reportedly warned co-founder Kianni that the practice could be "against compliance," but Kianni allegedly responded with a Slack message suggesting they could claim the user was trying to open the extension and roll it back if they complained. This exchange implies a calculated decision to proceed despite knowing the risks.

Company's Initial Response

When the initial Bloomberg report was published on July 8th, Phia representatives characterized the incident as a software bug, stating that the team had just been made aware of the issue and that it was immediately resolved "within the last 24 hours." This response now appears misleading in light of the new evidence, which suggests that the founders were not only aware of the issue but had been actively involved in its implementation.

The company's credibility has been further damaged by the revelation that the feature was not a bug but a controllable option on the internal dashboard. This contradicts the earlier claim of a sudden discovery and fix, raising questions about the startup's transparency and ethical standards.

Industry Context

The allegations against Phia are part of a broader pattern of questionable practices in the affiliate marketing industry. Cookie stuffing has been a persistent problem, with companies like Honey facing similar accusations. In Honey's case, the controversy led to a class-action lawsuit, highlighting the legal risks associated with such practices.

For Phia, a startup that relies on affiliate commissions for revenue, the allegations could be devastating. Not only do they risk legal action and platform bans, but they also erode consumer trust, which is critical for a shopping extension that promises to help users find deals.

Implications for the Startup

The new report raises serious questions about Phia's business practices and leadership. If the allegations are true, the founders' involvement in cookie stuffing could have legal consequences, including potential lawsuits from retailers and consumers. Additionally, the startup may face sanctions from affiliate networks and browser extension stores, which could cripple its operations.

Moreover, the reputational damage extends beyond Phia itself. Phoebe Gates, as a public figure and daughter of one of the world's most famous tech entrepreneurs, faces heightened scrutiny. The allegations could tarnish her image and raise questions about the ethics of the next generation of tech founders.

Conclusion

Bloomberg's latest investigation paints a damning picture of Phia's operations, alleging that its founders were not only aware of cookie stuffing but actively encouraged it. The company's initial response, characterizing the issue as a bug, now appears to be a cover-up. As the story unfolds, Phia will need to address these allegations transparently to salvage any remaining credibility. For the broader tech industry, this case serves as a cautionary tale about the ethical pitfalls of aggressive affiliate marketing tactics.

This article is based on reporting by Gizmodo. Read the original article.