Phia founders reportedly knew about cookie stuffing for months

Phia, the shopping startup co-founded by Phoebe Gates and Sophia Kianni, is facing new scrutiny over its business practices. Earlier this year, Bloomberg published an investigation showing that Phia was taking credit and commission for affiliate purchases it hadn’t actually helped generate — a practice known as cookie stuffing. It’s a practice that can get startups sued, since it’s seen as diverting referral revenue from other affiliate marketers; affiliate platforms like Phia typically sign contracts explicitly banning it as unfair. When Bloomberg first reported on the cookie stuffing, a Phia spokesperson said the company only learned of the issue when Bloomberg reached out.

New reporting from Bloomberg, based on leaked Slack messages and sources familiar with the matter, now says Gates and Kianni knew their startup was cookie stuffing as far back as December. The reporting found that cookie stuffing accounted for a good chunk of Phia’s sales, and that the company saw a sizable drop in daily revenue once it stopped the practice. Bloomberg also identified some of the affected retailers, including Nike and Nordstrom.

In early July, a Phia spokesperson had described the cookie stuffing as a bug, but Bloomberg now reports it was a purposefully built feature that could be switched on and off — and that the leaked Slack messages show Gates and Kianni discussing the practice with other executives and engineers. Responding to the new allegations, a Phia spokesperson told Bloomberg the company rebuffed some of the claims but said it would learn from this.

A Phia spokesperson gave TechCrunch this statement: “Any features causing misattributions were immediately removed over a month ago on July 7. 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.”

Phia launched last April with the promise of being a more effective, Google Flights-like site for shopping, helping users compare prices across retailers. Days after Bloomberg’s July investigation, Puck reported that Phia had lost almost half its full-time employees since the start of the year, that several brands were unaware they were listed on the app, and that investors had soured on how aggressively Phia leaned into affiliate marketing. The startup has also drawn past controversy over secretly collecting swaths of sensitive data, including tracking user behavior across the web and sending it back to its servers.

Why it matters

The reporting deepens the credibility problem for a startup that markets itself on price transparency, and raises the stakes for Gates and Kianni as advertisers and investors reassess how much they can trust Phia’s affiliate practices.