Ethan Carter
A recent investigation by Bloomberg has raised serious concerns about Phia, a shopping startup co-founded by Phoebe Gates, the daughter of billionaire Microsoft co-founder Bill Gates, and her Stanford roommate, Sophia Kianni. The investigation suggests that Phia has been involved in questionable online practices.
The report indicates that Phia’s web extension, designed to help online shoppers find better deals and discount codes, has allegedly made false claims about the sales it facilitated. This practice, known as cookie stuffing, is against the policies of many digital platforms.
Phia generates revenue by earning a commission from retailers for each sale it claims to facilitate. This is verified by placing a cookie on the shopper’s browser whenever a purchase is genuinely made using their extension. independent investigations by Bloomberg, researcher Ben Edelman, and competitor Capital One Shopping revealed that Phia’s app secretly opens a background tab to insert its affiliate code, overriding other referrals in order to secure the commission. Similar allegations were made against PayPal-owned Honey in 2024, which resulted in a class-action lawsuit.
On July 8th, representatives from Phia referred to the troubling situation as a software bug, asserting that the team had only recently become aware of the issue and that it had been rectified “within the last 24 hours.” However, a new investigation by Bloomberg claims that Phia executives, including Phoebe Gates, were well aware of the situation at least seven months prior to the report’s publication and allegedly encouraged the inclusion of these features.
Bloomberg’s report asserts that the issue stemmed not from a bug but from a controllable feature named “enable coupon auto drop” within the internal dashboard. Internal Slack communications and anonymous sources indicate that Gates had discussions with staff members in December, expressing a desire to ensure that Phia was dropping cookies on all websites, even if shoppers did not ultimately utilize their coupons.
The report claims that Phia utilized additional controversial practices, including a feature that automatically dropped a cookie every two hours if a user had previously interacted with Phia’s extension on a “top 1000 website.”
Another contentious practice involved dropping cookies whenever a shopper clicked anywhere after Phia’s pop-up appeared on the screen, even if the click was merely an attempt to close the pop-up. Internal communications revealed that an engineer informed co-founder Kianni that this practice could potentially violate compliance regulations. Kianni reportedly responded with a Slack message suggesting that they could justify the action by claiming that the user intended to engage with Phia and would roll it back if complaints arose.
The engineer then indicated that they did not believe this feature was necessary since the existing feature that drops cookies automatically every two hours was already performing satisfactorily. Kianni allegedly replied, “That makes sense yeah I just whatever we can do to keep these cookies dropping will be amazing thank you.”
The report further states that following the disabling of the “coupon auto drop” feature last month, Phia’s revenue plummeted from $80,000 to between $10,000 and $28,000, as shown in an internal revenue chart.
Phia has denied the allegations presented by Bloomberg, asserting that the revenue drop experienced last month was not solely attributable to the cessation of cookie stuffing practices. The company also announced plans to hire a head of compliance to prevent similar issues in the future.
The timing of the Bloomberg allegations coincides with Phia’s rapid rise to prominence. The startup has garnered significant attention and investment, raising over $40 million from prominent venture capital firms and well-known personalities such as Khloe Kardashian, Sydney Sweeney, Hailey Bieber, and former Meta COO Sheryl Sandberg. Both Gates and Kianni were featured on the Forbes 30 Under 30 list earlier this year, a distinction that has humorously been dubbed a curse due to the number of honorees later facing fraud allegations. If Bloomberg’s reports are accurate, this curse may have ensnared another pair of ambitious entrepreneurs.
Daniel Mercer
Brandon Fletcher
