Bill Gates’ Daughter’s Phia App Faces Scrutiny Over Alleged ‘Cookie Stuffing’ Scheme

Phoebe Gates, daughter of Microsoft co-founder Bill Gates, is facing growing scrutiny after her shopping startup, Phia, was accused of using software features that allowed it to claim commissions from online sales it did not actually generate.

Phia, an AI-powered shopping assistant co-founded by Gates and Sophia Kianni, earns money through affiliate commissions when shoppers make purchases through its platform. However, investigations have raised questions about whether the company’s software improperly claimed credit for transactions that were driven by other sources or occurred without Phia meaningfully influencing the purchase.

The practice, commonly referred to as “cookie stuffing,” involves placing affiliate tracking cookies on a user’s browser so that a company can receive credit for a purchase. In affiliate marketing, this can result in commissions being paid even when the affiliate did not actually generate the sale.

The controversy intensified following a Bloomberg investigation that examined internal communications and software records. According to the report, Gates and Kianni were aware of features that could place or refresh tracking cookies in ways that allowed Phia to claim sales credit as far back as December.

That timeline appears to contradict Phia’s initial public explanation that the problem had only recently been discovered and was caused by a software bug.

The scale of the alleged misattribution was also significant. A Phia data scientist reportedly estimated in an internal Slack message that the disputed practice accounted for about 51% of the merchandise value Phia claimed credit for in June.

After the features were disabled in July, reports indicated that Phia’s average daily revenue dropped sharply, providing another indication of how much the disputed activity had contributed to the company’s earnings.

The allegations have raised the possibility of serious legal consequences because deliberately manipulating affiliate tracking can potentially fall under US federal wire-fraud laws. Some legal experts cited in reports have pointed to a statutory maximum penalty of up to 20 years in prison for wire fraud.

However, it is important to note that Phoebe Gates has not been charged with a crime, and the 20-year figure represents a potential statutory maximum, not a sentence she has received or is necessarily expected to receive.

Phia has said it removed the features responsible for the disputed transactions and is reviewing its records. The company has also said it intends to reverse transactions that were incorrectly attributed to the platform and has moved to strengthen its compliance processes.

The controversy is particularly notable because Phia has attracted significant attention and investment since its launch. The startup has raised tens of millions of dollars from investors and high-profile figures, giving the allegations added visibility in the technology and startup communities.

For now, the central question is whether the disputed affiliate activity was genuinely the result of a technical malfunction or whether company executives knowingly allowed software features that improperly generated commissions.