Phoebe Gates and Sophia Kianni reportedly knew Phia was cookie stuffing for months
New reporting reveals founders knew about the startup's cookie stuffing practices as early as December, contradicting earlier claims.
Stock photo for illustration only, not from the actual event
- Phia, a shopping startup co-founded by Phoebe Gates and Sophia Kianni, faces fresh scrutiny over cookie stuffing.
- Leaked Slack messages and sources indicate founders knew about the practice as far back as December.
- The company experienced a sizable drop in daily revenue after halting the controversial practice.
- Phia stated it removed misattribution features on July 7 and is issuing transaction reversals to brand partners.
Phia, the shopping startup co-founded by Phoebe Gates and Sophia Kianni, is facing renewed controversy over its business practices following a Bloomberg investigation that detailed how the company took credit and commissions for affiliate purchases it did not actually generate, a practice known as cookie stuffing.
This method is highly controversial and can lead to startups facing lawsuits primarily because it siphons referral revenue away from legitimate affiliate marketers. When affiliate platforms join a marketplace, they typically sign contracts explicitly banning cookie stuffing due to its unfair nature.
Stock photo for illustration only, not from the actual event
When Bloomberg initially reported on the issue, a Phia spokesperson claimed the company only became aware of the problem when the publication reached out. However, subsequent reporting by Bloomberg indicates that Gates and Kianni were well aware of their startup's cookie stuffing practices as early as December, based on leaked Slack messages and sources familiar with the matter.
The latest findings revealed that cookie stuffing accounted for a significant portion of Phia's sales, leading to a sharp decline in daily revenue once the practice was stopped. The report also identified affected retailers, including major brands like Nike and Nordstrom.
Cookie stuffing represents a major ethical and contractual breach in the affiliate marketing ecosystem, unfairly diverting commissions away from creators and marketers who actually drove the traffic. When internal communications reveal that such functionality was intentionally engineered rather than being a mere bug, it poses severe reputational and legal risks for high-profile startup founders.
In early July, a Phia spokesperson dismissed the activity as a bug, but Bloomberg's reporting countered that claim by showing it was a purposely built feature equipped with an on-and-off switch. Furthermore, leaked Slack records captured Gates and Kianni discussing these practices alongside other executives and engineers.
In a statement provided to TechCrunch, an unnamed spokesperson for Phia stated that any features causing misattributions were immediately removed over a month ago on July 7. The company added that it is reviewing every transaction, has already begun issuing transaction reversals to brand partners, and is hiring a head of compliance to ensure the incident is never repeated.
Source: TechCrunch
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