Founders Knew. Retailers Paid. The Market Found Out.
The numbers come first. After Phia disabled its cookie-stuffing features on July 7, average daily revenue at the e-commerce startup collapsed from roughly $80,000 to between $10,000 and $28,000, according to an internal revenue chart reviewed by Bloomberg. That is a drop of as much as 87.5% — and it tells the real story of how the company was built.
Phia markets itself as a 'personal shopping assistant' that helps consumers find discount codes during online checkout. When a shopper uses the browser extension to complete a purchase, Phia earns a commission from the retailer. The business model is straightforward. The execution, according to Bloomberg's reporting, was not.
The startup's browser extension was engineered to report that Phia had driven a sale even when its product was never used — a technique known as 'cookie stuffing,' broadly prohibited by commercial partners. A Phia data scientist's Slack message from July 7, reviewed by Bloomberg, estimated that cookie stuffing accounted for approximately 51% of the merchandise value Phia claimed credit for selling in June alone. Affected retailers included Nike, Gap and Nordstrom, none of which responded to requests for comment.
The Timeline Contradicts the Company's Story
On July 8, Phia publicly stated it had become aware of the situation 'within the last 24 hours.' Internal communications and people with knowledge of the matter tell a different story: co-founders Phoebe Gates — daughter of Microsoft co-founder Bill Gates — and Sophia Kianni were aware of the cookie-stuffing features for at least seven months, dating back to December, according to Slack messages shared with Bloomberg and multiple sources who asked not to be identified.
Two people with knowledge of the matter said the Slack exchanges referenced in Bloomberg's reporting are no longer visible to Phia employees.
Advertising consultant Ben Edelman, who has spent more than two decades analyzing deceptive marketing practices, reviewed Phia's source code and data from impacted merchants. He analyzed three separate cookie-stuffing features and corroborated Bloomberg's findings. 'These additional findings reveal a multipart effort designed to inflate Phia revenue despite lack of benefit to merchants,' Edelman said. 'Phia should have spent more time learning the contracts to which they were bound and less time building tricks for quick profit.'
A Phia spokesperson said the features 'causing misattributions were immediately removed over a month ago on July 7,' and that the company has begun issuing transaction reversals to brand partners. The spokesperson also disputed the data scientist's 51% estimate, calling it a 'preliminary analysis' that used 'an incorrect methodology that overstated the potential impact.' The company added that the broader revenue decline reflected the disabling of 'most of its monetization efforts,' not just the cookie-stuffing features.
What Free Enterprise Actually Requires
This case is a reminder that free markets run on contracts and trust — two things Phia appears to have treated as optional. Retailers like Nike, Gap and Nordstrom entered affiliate agreements expecting commissions tied to real, user-driven sales. Instead, according to Bloomberg's review of historical source code, they were billed for transactions Phia's software manufactured. That is not innovation. That is fraud dressed in a browser extension.
The market has already voted: strip out the cookie stuffing and Phia's legitimate daily revenue sits somewhere between $10,000 and $28,000. Capital rewards clear rules, and the first rule is that you earn what you actually deliver. Hiring a head of compliance after seven months of documented awareness is not a corrective measure — it is damage control. Brand partners and investors deserve a full accounting, not a spokesperson's talking points.
