A Bloomberg investigation published last month claimed that Phia, a shopping startup co-founded by billionaire Microsoft co-founder Bill Gates’ daughter Phoebe Gates and her Stanford roommate Sophia Kianni, had been engaging in a shady online practice.
The report alleged that the startup’s web extension, which purports to find cheaper deals and discount codes for online shoppers, had been falsely claiming sales it did not actually drive via a practice called cookie stuffing, which violates digital platforms’ policies.
The startup makes money by collecting a commission from retailers for every sale that it facilitates, which it verifies by dropping a cookie on the shopper’s browser every time a purchase intentionally involves their extension. Independent testing by Bloomberg, researcher Ben Edelman, and rival company Capital One Shopping claims to have found that Phia’s app secretly opens a background tab to inject its own affiliate code, overriding other referrals to get the commission. Similar accusations also befell PayPal-owned Honey back in 2024, leading to a class-action lawsuit.
On July 8th, Phia representatives characterized the incident as a software bug and told Bloomberg that the team had just been made aware of the issue and that it was immediately resolved “within the last 24 hours.” But now, a new investigation by Bloomberg alleges that Phia executives, and specifically Phoebe Gates, were not just well aware of the situation at least seven months before the publication of the report, but also allegedly actively pushed for the inclusion of the features.
Bloomberg is reporting that the issue was not due to a bug but an actual controllable feature named “enable coupon auto drop” on the internal dashboard. Citing internal Slack chats and anonymous sources, Bloomberg claims that Gates had a Slack conversation with some staffers in December and allegedly wanted to verify that Phia was dropping cookies on all websites, even if the shopper did not end up using their coupon.
The report also claims that Phia employed other controversial practices, namely one feature that included dropping a cookie automatically every two hours if a user had ever interacted with Phia’s extension on a “top 1000 website.”
The other alleged controversial practice involved dropping cookies if the shopper clicked literally anywhere after Phia’s pop-up appeared on the page, even if that click was just the user trying to close the pop-up box. According to the internal communications as presented by Bloomberg, an engineer tried to tell co-founder Kianni that the practice could be “against compliance,” but Kianni allegedly responded with a Slack message that said, “I guess we could say that the user is trying to open us and roll it back if they complain.”
The engineer then allegedly responded by saying they didn’t need to implement this feature because the existing feature dropping cookies automatically every two hours was already “working pretty good,” to which Kianni reportedly replied with “That makes sense yeah I just whatever we can do to keep these cookies dropping will be amazing thank you.”
The report also claims that after the “coupon auto drop” feature was disabled last month, Phia’s revenue plunged from $80,000 to between $10,000 and $28,000, citing an internal revenue chart.
Phia denied the allegations to Bloomberg, including that the revenue decline they suffered last month was solely due to the reversal of cookie stuffing. They also reportedly said that the company would hire a head of compliance “to make sure something like this never happens again.”
The Bloomberg allegations dropped smack dab in the middle of Phia’s meteoric success story. The startup and its co-founders had swiftly generated intense hype online after the company’s founding, raising more than $40 million from notable venture capital firms and famous names like Khloe Kardashian, Sydney Sweeney, Hailey Bieber and girlboss/Meta’s former COO Sheryl Sandberg. Gates and Kianni also both made the Forbes 30 under 30 list earlier this year, which the internet likes to jokingly refer to as a curse considering that a comical number of its honorees have later been accused of fraud. If the Bloomberg reports are accurate, then the curse might have claimed yet another set of eager entrepreneurs as victims.
