Phoebe Gates, daughter of Microsoft co-founder Bill Gates, is facing growing scrutiny over allegations involving Phia, the AI-powered shopping startup she co-founded, after reports raised questions about how the company attributed online sales and earned affiliate commissions.
The controversy centres on a practice known as “cookie stuffing”, in which tracking cookies can be placed on a user’s browser in a way that allows an affiliate to claim credit for a purchase it did not actually generate. Such practices can violate agreements with affiliate networks and, depending on the circumstances, potentially lead to civil or criminal liability.
Recent reports have focused particular attention on internal communications and software features at Phia. According to reporting based on internal Slack messages and other material reviewed by Bloomberg, Gates and co-founder Sophia Kianni were allegedly aware of features that could cause Phia to receive credit for purchases even when the platform had not driven the transaction. The reports said the practice dated back to at least December 2025.
Phia has disputed elements of those reports. After the initial allegations emerged in July, the company said a software issue had resulted in “misattributions” and that it had identified and fixed the problem. The company later said that any features causing the misattributions had been removed on July 7, that it was reviewing transactions and that it had begun reversing affected payments to brand partners. Phia also said it was hiring a head of compliance.
What is cookie stuffing?
Cookie stuffing is an affiliate-marketing practice in which a tracking cookie is placed on a user’s device even though the affiliate may not have legitimately referred the customer to the retailer.
Affiliate marketing normally allows a website or shopping service to receive a commission when it directs a customer to a retailer and that customer subsequently makes a purchase. The tracking cookie helps establish which affiliate generated the referral.
The controversy surrounding Phia concerns allegations that its technology could place or refresh affiliate tracking cookies without the user taking the action normally required to establish a referral. Bloomberg’s reporting, cited by Fortune and TechCrunch, said some of the features were designed to cause Phia to receive credit for sales that it had not generated.
Why is a 20-year prison sentence being mentioned?
Reports about the controversy have highlighted that wire fraud under US federal law can carry a statutory maximum sentence of up to 20 years in prison.
That does not mean Phoebe Gates has been sentenced to 20 years, or that she is currently facing a criminal prosecution carrying that sentence. As of the latest reporting reviewed, Gates has not been criminally charged over the allegations.
The 20-year figure is therefore a potential statutory maximum that could become relevant only if prosecutors brought an appropriate federal charge, secured a conviction and the applicable sentencing provisions were applied. Legal experts cited in recent coverage have stressed that the maximum penalty does not represent the likely punishment in an actual case.
What happened to Phia’s revenue?
The allegations have also raised questions about the financial impact of the disputed practices.
Fortune reported, citing Bloomberg’s investigation and an internal revenue chart, that Phia’s average daily revenue fell substantially after the features were disabled in July. An internal analysis reportedly estimated that cookie stuffing accounted for a significant portion of the merchandise value Phia claimed credit for in June.
Phia disputed that interpretation, saying its revenue decline was also linked to the broader suspension of monetisation activities and that one preliminary internal analysis overstated the effect of the disputed features.
The affiliate network Impact.com also suspended Phia from its marketplace following the initial reporting and began reallocating certain commissions attributed to the company, according to Fortune.
Phoebe Gates’ AI shopping startup
Phia was co-founded by Gates and Sophia Kianni and launched as a shopping assistant designed to help consumers compare prices and find deals across online retailers.
The service operates through a browser extension that can help shoppers find discount codes and products. Its business model includes earning commissions through affiliate links when users make purchases through participating retailers.
The startup attracted considerable attention and investment, raising more than $35 million in a Series A funding round announced in January, according to Fortune. The company has also attracted high-profile investors and celebrity attention.
No criminal charge has been reported
Despite headlines suggesting that Gates could face 20 years in prison, there is currently an important distinction between allegations and a criminal prosecution.
The reporting reviewed for this article does not show that US prosecutors have charged Gates with wire fraud or that a court has found her guilty of a crime. The allegations concern the conduct of Phia and the actions of its founders as reported through internal communications and other evidence cited by media investigations.
Phia has said it removed the features at issue, is reviewing transactions and is taking steps to address compliance concerns. The company has also said it intends to learn from the controversy and continue developing its shopping technology.
The controversy could nevertheless have significant implications for Phia as regulators, business partners, affiliate networks and investors assess the allegations and the company’s response.
For now, the reported 20-year figure should be understood as a potential statutory maximum associated with certain federal fraud charges, not as a prison sentence facing Phoebe Gates. Any criminal liability would require a formal prosecution and proof of the relevant elements of an offence in court.