Bill Gates’ “nepo baby” daughter Phoebe Gates, 23, has been accused of “cookie stuffing” at her multibillion-dollar startup, Phia – an illicit practice that comes with a maximum penalty of 20 years in federal prison, according to reports.
Phia – a digital personal shopping assistant co-founded by Gates with fellow Stanford alum Sophia Kianni – reacted with shock in July following reports that it was dropping more web “cookies” than it should, taking undue credit for online sales at retail partners.
The company released a statement that it had only learned of the issue “within the last 24 hours,” pledging to fix the glitch – but according to a new Bloomberg report, the young entrepreneurs had known for at least seven months that their startup was overcounting its sales commissions.
Ariel Givner, founder and principal attorney at Givner Law, warned in a post on X Tuesday that “cookie stuffing” can come with serious consequences.
“It’s typically treated as federal wire fraud in US courts. There’s a possibility of a max penalty of up to 20 years prison + fines/restitution,” Givner wrote.
A Phia spokesperson told The Post: “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.
“We are now continuing to connect our users with items and offers from thousands of brand partners,” the spokesperson added. “We will learn from this and want to ensure our users have the best possible shopping experience, with features like our new digital closet and more to come.”
The startup – which raised a jaw-dropping $30 million in 2025 from backers including Hailey Bieber, Kris Jenner and Spanx founder Sara Blakely – operates as a browser extension, finding discount codes for customers across online retailers when they click on Phia at checkout.
When a shopper uses Phia by selecting one of its coupon codes, the software drops a “cookie” – which tracks activity across the web – to show that retailer it helped drive the sale and earn itself a commission.
But Kianni and Gates – the Microsoft princess whose dad is worth $108.4 billion, according to Forbes – were aware of features that dropped cookies into the checkout process even when customers did not use Phia, according to people familiar with the matter and internal Slack messages reviewed by Bloomberg.
The illicit cookie stuffing traced back to at least December across sales at several major retailers, including Nike, Gap and Nordstrom, and seemingly made up the bulk of Phia’s revenue, according to the news outlet.
After Phia disabled the features in July, average daily revenue at the company plummeted from around $80,000 to between $10,000 and $28,000, according to Bloomberg.
In June, cookie stuffing accounted for about 51% of the merchandise value that Phia claimed credit for selling, the report said.
A Phia spokesperson said part of the steep revenue decline in July was caused by the company disabling most of its monetization efforts at the time, not just the cookie stuffing, and that Bloomberg’s analysis of the data was overstated.
According to an internal dashboard viewed by Bloomberg, what Phia initially called a software bug in July was actually a feature called “enable coupon auto drop,” which the company was able to switch on and off.
At one point, Gates – who insisted that she wanted to succeed without her billionaire parents’ help, saying she has “such a desire to prove myself” – grew concerned that Phia wasn’t generating as much commission from Etsy as she had expected.
She messaged developers to make sure that Phia was dropping a cookie each time its browser extension popped up, even if the shopper didn’t click a coupon, which would allow it to earn commission for the total gross merchandise value, the report said.
In a Slack channel on Dec. 18, she wrote: “worried this is an issue across the board…can u confirm auto pop for cookie drop is live on ALL sites w a coupon to confirm we are monetizing on all gmv.”
In a separate incident, Kianni suggested a feature that would drop a cookie each time a user simply tried to close out a Phia pop-up, according to Bloomberg.
A colleague told Kianni that Google Chrome prohibits extensions from dropping affiliate cookies on “dismiss events,” or when a customer simply tries to close out a notification, and Kianni conceded.
But she added: “I guess we could say that the user is trying to open us and roll it back if they complain,” according to the report.
A Phia spokesperson told Bloomberg that this feature was never implemented.
Impact.com, one of Phia’s affiliates, had already suspended the network and reallocated commissions that it had set aside to pay Gates’ company, according to the report.
Though Phia said it has already started looking into transfer reversals, it might have to issue extra refunds since the policy was in place from December through July, a much longer time period than initially thought.