Phoebe Gates, daughter of Microsoft co-founder Bill Gates, and her AI-powered shopping startup Phia are facing allegations of improper affiliate marketing practices, commonly known as "cookie stuffing." While legal experts indicate that criminal charges carrying a maximum penalty of 20 years in prison are unlikely, the company and its co-founders could face significant civil lawsuits and financial penalties if the claims are substantiated.
Star Kashman, founding partner of Cyber Law Firm, explained that proving federal wire fraud would require demonstrating a knowing and organized scheme to defraud. "This can’t be a careless or negligent error," Kashman told The Post. The more immediate risk for Gates and Phia, according to Kashman, lies in potential financial repercussions.
Parties who can prove financial losses due to Phia's alleged conduct could pursue civil claims related to commissions, contracts, business relationships, as well as privacy and consumer protection issues. "The more likely penalty here is financial penalties," Kashman stated.
Phia, co-founded by Gates and Sophia Kianni, launched its consumer app and browser extension in April 2025. A report from Bloomberg indicated that Phia’s browser extension may have been dropping affiliate tracking cookies even when users did not take the actions typically required for the startup to claim a sale. This practice reportedly affected major affiliates including Nike, Nordstrom, and The Gap, though these companies have not yet publicly commented.
Internal Slack communications and source code cited in the Bloomberg report suggested that the founders were aware of these automatic cookie-placement features months before the attribution problem was publicly disclosed. Phia has disputed aspects of the report and has not been charged with any crime. Kashman emphasized that "Even with intent, prosecution is never automatic," and that it would be "very unlikely" for a young entrepreneur with a clean record to receive the maximum sentence for a first offense.
Legal experts suggest that civil litigation is a more probable outcome. Ben Edelman, an advertising researcher, referred to the practice as "forced clicks" when client-side software like a browser extension is involved, noting it is a "thin difference" from cookie stuffing. He 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 "obvious improper reason — to get paid more (a lot more)." Edelman characterized these actions as "the most fundamental breach of network and merchant rules."
Richard Newman, an attorney specializing in the performance-marketing industry, noted that cookie stuffing is typically prohibited by affiliate agreements and is usually handled as a contractual matter. "Cookie stuffing is… usually a method by which to invalidate commissions," Newman said.
Bloomberg reported that Phia's average daily revenue decreased significantly after the disputed features were disabled, although the company stated this decline was also influenced by its decision to turn off most monetization efforts. The Post has sought comment from Gates and Phia.