By Titik Puspa 
The shopping startup Phia, co-founded by Phoebe Gates and Sophia Kianni, is once again ensnared in controversy over its alleged business practices, with new reporting from Bloomberg indicating that the company’s leadership was aware of "cookie stuffing" tactics as far back as December, contradicting previous statements that the issue was an accidental bug. This latest development escalates concerns surrounding Phia’s affiliate marketing strategies, which have already drawn significant criticism and investigations.
At its core, cookie stuffing is an exploitative digital marketing technique where a website or app uses hidden methods, often through malicious code or deceptive pop-ups, to place cookies on a user’s browser without their explicit consent or knowledge. These cookies are designed to register a purchase as originating from a specific affiliate, thereby allowing the perpetrator to claim commission on sales they did not genuinely influence. This practice is widely considered unethical and often violates the terms of service agreements between affiliate networks, retailers, and marketing platforms. For startups like Phia, which aims to aggregate deals and offer competitive pricing information, engaging in such practices can severely damage trust and lead to legal repercussions, including lawsuits from affected retailers and affiliate marketers.
The initial allegations surfaced earlier this year when Bloomberg published an investigative report detailing how Phia was allegedly taking credit and commission for affiliate purchases it did not help generate. This practice, commonly known as cookie stuffing, effectively siphons revenue away from legitimate affiliate marketers who have a direct relationship with the brands they promote and who invest in genuine customer acquisition strategies. Typically, when platforms like Phia enter into agreements with marketplaces or directly with retailers for affiliate partnerships, they sign contracts that explicitly ban cookie stuffing due to its inherently unfair nature. These contracts are designed to ensure a level playing field and to protect the integrity of affiliate marketing ecosystems.
Following the initial Bloomberg report in July, a spokesperson for Phia issued a statement to the publication claiming that the company was only made aware of the cookie stuffing issue upon being contacted by Bloomberg. This assertion suggested that the practice, if it occurred, was an unintended technical glitch rather than a deliberate strategy. However, new reporting from Bloomberg, published on August 11, 2026, paints a starkly different picture. This latest investigation, drawing on leaked Slack messages and insights from sources familiar with the matter, provides compelling evidence that Gates and Kianni, Phia’s co-founders, were aware of the company’s cookie stuffing activities as early as December 2025. The leaked communications allegedly show discussions between the co-founders and other executives and engineers regarding these practices, indicating a level of knowledge and involvement that contradicts the initial "bug" narrative.
The implications of this new reporting are significant. Bloomberg’s latest findings suggest that cookie stuffing constituted a "good chunk" of Phia’s sales revenue. The report further indicates that Phia experienced a "sizable drop" in its daily revenue once the practice was reportedly ceased. This suggests that the company had become reliant on these deceptive tactics for a substantial portion of its financial performance, raising further questions about its underlying business model and growth strategy. The outlet also identified specific affected retailers, including prominent brands like Nike and Nordstrom, who are likely to have been defrauded of their rightful affiliate commissions.
Further exacerbating the situation is the revelation that the cookie stuffing was not merely a "bug," as Phia had previously described it, but rather a "purposefully built feature that could be switched on and off." This indicates a level of intentionality and control over the practice, moving it from the realm of an accidental error to a deliberate business decision. The leaked Slack messages are central to this new evidence, providing a digital paper trail that allegedly implicates Phia’s leadership in the discussions and potential implementation of these tactics.
In response to the latest allegations, a Phia spokesperson reiterated to Bloomberg that the company "rebuffed some of the publication’s claims" but also acknowledged that the company would "learn from this." This dual stance of denial and a commitment to learning suggests a company grappling with the fallout of its alleged practices while attempting to mitigate further damage to its reputation.
When contacted by TechCrunch for a statement, an unnamed Phia spokesperson provided a more detailed response, emphasizing the company’s actions to rectify the situation. "Any features causing misattributions were immediately removed over a month ago on July 7," the spokesperson stated. "We are reviewing every transaction, we are fully committed to and have already begun issuing all transaction reversals to brand partners as a result of any misattribution, and we are hiring a head of compliance to make sure something like this never happens again." This statement indicates that Phia acknowledges that misattributions occurred and is taking steps to address them, including financial reimbursements to brand partners and the establishment of a compliance role. The company also reiterated its commitment to learning from the incident.
Phia launched in April 2025 with an ambitious vision to become a "Google Flights-like site for shopping," aiming to simplify the online shopping experience by helping users find the best prices across a wide range of retailers. This model relies heavily on affiliate partnerships, where Phia earns a commission for driving sales to these retailers. The success of such a model is contingent on building trust with both consumers and brand partners.
The cookie stuffing scandal is not the only controversy to plague Phia. In early July, shortly after Bloomberg’s initial investigation, Puck News reported that Phia had lost nearly half of its full-time employees since the beginning of the year. This significant staff reduction raised questions about the company’s stability and internal operations. Puck also revealed that several brands were unaware that their products were even listed on the Phia app, suggesting a lack of transparency in Phia’s onboarding and partnership processes. Furthermore, the report indicated that investors were becoming increasingly wary of Phia’s aggressive approach to affiliate marketing, signaling potential concerns about the sustainability and ethical implications of its strategies.
Beyond affiliate marketing ethics, Phia has also faced scrutiny regarding its data collection practices. A Fortune report from November 2025 highlighted concerns about how Phia was allegedly "secretly collecting swaths of sensitive data," including tracking user behavior across the web and transmitting this information back to their servers. This practice, if confirmed, raises significant privacy red flags and could put Phia in violation of data protection regulations. The combination of these issues – alleged cookie stuffing, high employee turnover, undisclosed brand partnerships, investor apprehension, and aggressive data collection – paints a picture of a startup struggling with significant ethical and operational challenges.
The role of Phoebe Gates, daughter of Bill Gates, and Sophia Kianni, a prominent TikTok influencer, as co-founders has undoubtedly brought Phia significant attention and initial buzz. However, this high profile also means that controversies surrounding the company are amplified. The latest revelations about the co-founders’ alleged awareness of cookie stuffing practices place them directly at the center of the controversy, raising questions about their leadership and oversight.
The affiliate marketing industry is a complex ecosystem where trust and transparency are paramount. Companies that engage in deceptive practices risk alienating consumers, damaging brand relationships, and facing severe legal and financial consequences. Phia’s current situation serves as a cautionary tale about the perils of prioritizing rapid growth over ethical business conduct. The company’s future will likely depend on its ability to regain the trust of its brand partners, investors, and the wider market, a task that will be made significantly more challenging by the mounting evidence of its alleged deceptive practices. The commitment to issuing transaction reversals and hiring a head of compliance are steps in the right direction, but the deeper implications of the alleged intentionality behind the cookie stuffing remain a significant hurdle for Phia to overcome. The industry will be watching closely to see if Phia can truly "learn from this" and rebuild its reputation on a foundation of integrity.
