A shopping startup co-founded by Phoebe Gates, daughter of Bill Gates, is currently embroiled in a legal and ethical controversy following allegations of deceptive affiliate marketing practices. Phia, an AI-powered shopping platform co-founded by Gates, 23, and Stanford classmate Sophia Kianni, stands accused of engaging in what industry insiders refer to as "cookie stuffing" or "forced clicks," a maneuver that could expose the company and its founders to substantial civil lawsuits and potential criminal charges.
"There is no proper reason for an extension to invoke an affiliate link, and place an affiliate cookie, when the user hasn’t meaningfully interacted with it. But there is an obvious improper reason — to get paid more (a lot more)." — Ben Edelman, Advertising Researcher
The allegations, detailed in findings published by Bloomberg this week, center on Phia’s browser extension, which was launched to consumers in April 2025 alongside its app. Bloomberg’s report claims that the extension was designed to trigger affiliate tracking cookies on users’ devices without the necessary click-through action typically required for an affiliate to legitimately claim a commission. This practice, if proven, allows the affiliate to earn commissions for sales that it did not directly influence. Retail giants such as Nike, Nordstrom, and The Gap are reportedly among the affiliates whose systems were affected by these alleged practices. None of the named retailers have issued public comments since the Bloomberg report emerged.
Affiliate marketing is a widespread e-commerce model where businesses reward affiliates—websites, apps, or browser extensions—for driving sales. When a shopper clicks an affiliate's link or uses their coupon and subsequently makes a purchase, a tracking cookie records the affiliate’s contribution, ensuring they receive a commission. "Cookie stuffing" subverts this process by planting these tracking cookies on a user's device without genuine interaction, thereby enabling the affiliate to falsely claim credit for sales. Ben Edelman, an advertising researcher who has scrutinized Phia’s conduct, clarified to The Post that while the terms overlap, he prefers "forced clicks" when browser extension software is involved, emphasizing the lack of meaningful user interaction. Edelman stated that there is "no proper reason for an extension to invoke an affiliate link, and place an affiliate cookie, when the user hasn’t meaningfully interacted with it," adding that the motivation is "to get paid more (a lot more)."
Internal communications, including Slack messages and source code reviewed by Bloomberg, reportedly indicate that Phia's leadership was aware of the automatic cookie-placement issue for several months before publicly addressing the attribution problem. In response to the allegations, Phia has contested certain elements of Bloomberg’s account and explicitly denies any criminal wrongdoing. The company maintains that its actions were not illegal and disputes the characterization of its practices.
The legal ramifications of such allegations are significant. Attorney Star Kashman, founding partner of Cyber Law Firm, outlined the potential criminal stakes, noting that federal wire fraud statutes could carry prison sentences of up to 20 years, in addition to monetary penalties. However, Kashman emphasized that securing such a conviction requires a high bar of proof, demanding evidence of a "knowing scheme that is organized to defraud these individuals (affiliates, businesses etc.) of their money," rather than mere carelessness or negligence. While acknowledging the severity of potential charges, Kashman expressed skepticism that Gates would face a two-decade prison sentence, citing that prosecutors rarely pursue maximum sentences against first-time offenders with clean records.
Kashman believes financial penalties are a more probable outcome for Phia and its founders. Businesses that can demonstrate financial losses due to Phia’s alleged practices could pursue civil lawsuits for lost commissions, breach of contract, and damage to business relationships. Furthermore, potential claims related to privacy violations and consumer protection breaches could also factor into such legal actions. "If proven to be true, I see it as a likely possibility that herself and/or her company will be taken to court over this alleged scheme," Kashman remarked.
Richard Newman, a performance-marketing attorney with over two decades of experience, corroborated that affiliate agreements typically prohibit cookie stuffing. He told The Post that such practices usually serve as grounds to invalidate commissions. Newman generally frames these disputes as private contractual battles rather than criminal matters, although he acknowledged the graver consequences if fraud is definitively proven. Affiliates found in violation of these rules typically forfeit their earnings.
The controversy has already had a discernible impact on Phia’s financial performance. Bloomberg reported a substantial decline in the company’s average daily revenue, plummeting from approximately $80,000 to a range of $10,000 to $28,000 after the disputed cookie features were reportedly deactivated. Phia, however, disputes that the feature change is the sole explanation for the revenue drop, attributing the decline instead to its own strategic decision to scale back most monetization efforts around the same period.
As of now, neither Phoebe Gates nor Phia faces formal charges, and the retailers implicated in the allegations have remained silent. The ultimate legal and financial outcomes of this scandal remain unresolved, underscoring the complexities of digital commerce ethics and enforcement.
