Bloomberg reports that the shopping extension startup Phia allegedly engaged in "cookie stuffing" to manipulate user browsers for commissions. The company, which has raised more than $40 million, is facing intense scrutiny after researchers found it was overriding other affiliate referrals.
The background tabs used to override rival referrals
Phia's core business model relies on earning commissions from retailers by helping users find discounts . However, independent testing has challenged the legitimacy of how those commissions are secured. According to a report by Bloomberg, researchers including Ben Edelman and the rival firm Capital One Shopping discovered that the Phia extension was secretly opening background tabs to inject its own affiliate code into a user's session.
This practice, known as "cookie stuffing," effectively allows a company to hijack a sale that might have otherwise been attributed to a different retailer or affiliate. By overriding existing referrals, Phia could ensure that the commission for a purchase was directed to its own accounts, even if the user did not intentionally use the Phia extension to complete that specific transaction.
Phoebe Gates and the alleged push for deceptive features
While Phia initially characterized these technical maneuvers as a mere software bug, new evidence suggests a more intentional approach. The Bloomberg report alleges that Phia executives, including Phoebe Gates, were aware of these practices months before they were addressed and actively pushed for the inclusion of these features within the extension.
If these allegations are verified, it would shift the narrative from technical negligence to a deliberate strategy of deceptive growth. This distinction is critical for investors, as it transforms a coding error into a potential case of systemic corporate fraud.
A revenue plummet following the end of two-hour cookie drops
The financial impact of these disputed practices became clear once they were discontinued.. The report claims that Phia had been automatically dropping cookies every two hours on any user who had interacted with the extension on a top 1,000 website. This aggressive method ensured Phia remained the "last click" in the affiliate chain, securing a constant stream of revenue.
Following the cessation of these two-hour cookie drops,Phia's revenue reportedly plummeted. this volatility comes at a sensitive time for the startup, which had recently seen rapid growth and had successfully raised over $40 million from high-profile investors and celebrities. The company's founders were also recently recognized on the Forbes 30 under 30 list, making the sudden collapse of their revenue stream even more significant.
The discrepancy between a 'software bug' and executive awareness
Phia has officially denied the allegations of deceptive practices, attributing the recent decline in revenue to other unspecified factors. as reported by Bloomberg, the company has announced plans to hire a head of compliance in an attempt to address the growing controversy and stabilize its operations.
Several critical questions remain unanswered by the current disclosures. it is still unclear whether the revenue drop was caused solely by the removal of the two-hour cookie drops or if retailers are also pulling away due to the allegations. furthermore,the company has yet to provide a detailed explanation of how it will reconcile the claims of executive involvement with its stance that the issues were simply unintentional bugs.
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