Phia's problem is no longer just cookie stuffing. Bloomberg's later reporting says the startup knew about the practice for months before it called the issue a last-minute bug.
Phia's shopping extension allegedly took credit for sales it didn't drive - that's bad enough on its own. It's the timeline. Bloomberg reported that the AI shopping app co-founded by Phoebe Gates and Sophia Kianni had features that dropped affiliate cookies without clear user intent, and that internal Slack messages showed the founders knew about the practice going back to December.
That changes the story. A bad attribution system can be fixed. A public explanation that clashes with internal messages is harder to repair.
Phia was built around a simple pitch: a browser extension and app that helps shoppers compare prices, find secondhand options and apply discount codes. TechCrunch reported in January that the company had raised $35 million from Notable Capital, Khosla Ventures, Kleiner Perkins and others, after an earlier $8 million seed round. Gates and Kianni had the kind of founder profile consumer startups chase, with Stanford, celebrity investors and a product aimed straight at Gen Z shopping habits.
Then Bloomberg tested the extension. Its July investigation found that when a shopper reached checkout on retail sites, Phia could open a background tab and inject its own affiliate code, even when the shopper had arrived directly or through another publisher, including Wirecutter. The affiliate industry calls that cookie stuffing, and major platforms generally ban it because it lets one player claim a commission another affiliate earned, or create a commission where no real referral happened.
Phoebe Gates's Phia Knew About Cookie Stuffing Months Before It Admitted It Leaked Slack messages reviewed by TechCrunch show Phoebe Gates and Sophia Kianni knew Phia was cookie stuffing as far back as December, months before claiming they'd only just discovered the scheme. Bloomberg estimates the practice netted Phia over $10 million and got it suspended from Impact.com. - how to detect cookie stuffing fraud - Phoebe Gates Phia browser extension scandal
Here's the thing: the alleged conduct is bad, but the company's first answer made it worse. Bloomberg reported that a Phia spokesperson said on July 8 that the company had become aware of the issue only in the previous 24 hours. Twenty-four hours. Later reporting by Bloomberg, republished by Fortune, said internal Slack messages and people familiar with the matter showed Gates and Kianni had known about the relevant features for at least seven months.
The Slack timeline is the hard part #
Bloomberg reported that an internal dashboard showed a remotely controlled feature called "enable coupon auto drop." It was switched on starting Dec. 10 and wasn't turned off until July 7, the day Bloomberg first contacted Phia for comment. Gates appeared in a Dec. 18 Slack discussion about whether cookies were being automatically set across retail partners when Phia's coupon box appeared, according to the report. That is not the same as a random bug waking up in July.
Kianni's messages create a similar problem. Bloomberg reported that one feature, internally called passive trigger, dropped a cookie every two hours on certain retail sites after a user had previously interacted with Phia. In another Slack exchange cited by Bloomberg, Kianni wrote, "Whatever we can do to keep these cookies dropping will be amazing thank you." That's a brutal sentence for any compliance team to read after the fact.
Phia has pushed back on parts of the reporting. A spokesperson told Bloomberg that features causing misattributions were removed on July 7, that the company had started reviewing transactions and issuing reversals to brand partners, and that it was hiring a head of compliance. The spokesperson also said Bloomberg's internal revenue analysis relied on incorrect methodology and overstated the impact.
Fine. Disputes over methodology happen. But you still have to deal with the operational facts Bloomberg put on the table: the features existed, the company disabled them after press outreach, and affiliate partner Impact.com suspended Phia from its marketplace.
The money shows why merchants care #
The revenue drop is where this stops being a media flare-up and becomes a business problem. Bloomberg reported that after Phia disabled the disputed features in early July, average daily revenue fell from about $80,000 to between $10,000 and $28,000. A Phia data scientist's July 7 Slack message, also reviewed by Bloomberg, estimated that cookie stuffing accounted for about 51% of the merchandise value Phia claimed in June.
That's not a rounding error.
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Impact.com said it suspended Phia after Bloomberg's first report and was reallocating commissions attributed to the startup but not yet paid out since June 20. Bloomberg also reported that Ben Edelman, an advertising consultant who reviewed Phia's source code and merchant data, corroborated its analysis of three cookie stuffing features. When the affiliate platform starts moving commissions away from you, the debate has already left the group chat.
For users, the question is simpler. You install a shopping assistant because you expect it to save you money or show you better options. You don't expect it to slip into the transaction and collect credit for a sale it didn't influence. Phia's whole brand was built on trust at checkout, exactly the place where this allegation cuts deepest. Gates' surname is why the story travels. It isn't why the story matters. The issue would be just as serious with an unknown founder and a boring cap table. Phia raised real money, worked through real affiliate networks and allegedly affected real merchants, including Nike, Gap and Nordstrom, which Bloomberg said did not respond to requests for comment.
Now Phia has to win back retailers, users and the affiliate platforms that make its model work. That's a harder job than launching a consumer app with famous backers. It starts with the part startups hate most: a clear account of what was built, who approved it and how much money needs to go back.
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