Phia, a shopping startup co-founded by Phoebe Gates and Sophia Kianni, is facing new allegations that its founders were aware of the company's 'cookie stuffing' practices for months, contrary to previous statements. The practice involves taking credit for affiliate purchases not generated by the company.
The allegations raise serious questions about the founders' knowledge of and involvement in potentially fraudulent business practices, impacting investor confidence, retailer relationships, and the startup's reputation.
Phia, a shopping startup co-founded by Phoebe Gates and Sophia Kianni, is once again facing scrutiny over its business practices, specifically alleged 'cookie stuffing.' This controversial method involves a company taking credit and commission for affiliate purchases it did not help generate, a practice that can lead to lawsuits and is often banned in marketplace contracts.
Earlier reporting by Bloomberg indicated that Phia was unaware of the cookie stuffing issue until the publication's inquiry. However, new reporting from Bloomberg, citing leaked Slack messages and sources familiar with the matter, suggests that Gates and Kianni knew about the practice as far back as December. The report indicates that cookie stuffing constituted a significant portion of Phia's sales, and the company experienced a notable drop in daily revenue once the practice was stopped.
Retailers such as Nike and Nordstrom were reportedly affected by Phia's actions. While a Phia spokesperson previously referred to the cookie stuffing as a 'bug,' Bloomberg now states it was a deliberately built feature that could be activated or deactivated. Leaked messages reportedly show Gates and Kianni discussing these practices with other executives and engineers. In response to the latest allegations, a Phia spokesperson told Bloomberg that while some claims were rebuffed, the company would 'learn from this.'
Phia launched with the aim of creating a shopping platform similar to Google Flights, helping users find the best prices across various retailers. The company has also faced other controversies, including allegations of secretly collecting sensitive user data and a significant reduction in its full-time staff. Investors have reportedly expressed concerns about the company's aggressive approach to affiliate marketing.