Bill Gates' 23-year-old daughter Phoebe Gates faces accusations that her multimillion-dollar shopping startup secretly hijacked online sales commissions from major retailers, a practice one attorney says federal courts typically treat as wire fraud carrying up to 20 years in prison.

Internal Slack messages reviewed by Bloomberg show Gates directed developers at Phia, the browser-extension startup she co-founded with fellow Stanford alum Sophia Kianni, to confirm that the tool was dropping affiliate tracking cookies every time it appeared on a shopper's screen, even when the customer never clicked a coupon or used Phia's service. The practice, known in the digital-advertising world as "cookie stuffing," let Phia claim credit for online purchases it played no role in driving and pocket commissions from retailers including Nike, Gap, and Nordstrom, the New York Post reported.

The allegations paint a picture not of a software glitch but of a deliberate revenue strategy, one the co-founders discussed in company channels and that accounted for roughly half of Phia's claimed sales value by June. And when the scheme first surfaced publicly in July, Phia told the world it had just learned of the problem "within the last 24 hours." Bloomberg's reporting, based on internal records and people familiar with the matter, says Gates and Kianni had known about the cookie-dropping features for at least seven months.

Gates' own Slack messages outline the scheme

On December 18, Gates wrote in a company Slack channel that she was concerned Phia wasn't generating enough commission from Etsy. Her message to the development team was blunt:

"worried this is an issue across the board...can u confirm auto pop for cookie drop is live on ALL sites w a coupon to confirm we are monetizing on all gmv."

The message directed engineers to verify that Phia's extension was automatically dropping an affiliate cookie each time it popped up, regardless of whether the shopper interacted with a coupon. In plain terms, Gates wanted confirmation that Phia was taking a cut of every sale on every site, whether the customer used Phia or not.

Co-founder Kianni went further. She suggested building a feature that would plant a cookie even when a user tried to close out a Phia pop-up. A colleague warned her that Google Chrome prohibits extensions from dropping affiliate cookies on "dismiss events", moments when a user actively declines the tool. Kianni's response, per Bloomberg's review of the messages:

"I guess we could say that the user is trying to open us and roll it back if they complain."

A Phia spokesperson told Bloomberg that the dismiss-event feature was never implemented. But the exchange shows a co-founder proposing a workaround to platform rules and openly discussing how to handle complaints if users caught on.

The startup's internal dashboard revealed that what Phia initially called a software bug was actually a named feature, "enable coupon auto drop", that the company could switch on and off at will. That distinction matters. A bug is an accident. A toggle is a decision.

Revenue collapsed the moment the feature went dark

Phia disabled the cookie-stuffing features on July 7. The financial impact was immediate and severe. Average daily revenue dropped from approximately $80,000 to somewhere between $10,000 and $28,000, Bloomberg reported. By June, cookie stuffing had accounted for roughly 51 percent of the total merchandise value Phia claimed credit for selling.

A Phia spokesperson pushed back on the scale of the decline, telling Bloomberg that part of the revenue drop resulted from the company disabling most of its monetization efforts at the time, not just the cookie stuffing, and that Bloomberg's analysis of the data was overstated. But even by Phia's own framing, the company acknowledged that the features caused "misattributions" serious enough to require transaction reversals to brand partners.

Impact.com, one of Phia's affiliate networks, suspended the company and reallocated commissions that had been set aside to pay Phia. The move effectively cut off a major revenue pipeline. No public figure has been released for the total dollar value of commissions improperly claimed across the December-to-July window, and the number of affected retail partners beyond the four named, Nike, Gap, Nordstrom, and Etsy, remains unknown.

The case echoes a broader pattern of well-connected figures in the tech and finance world facing scrutiny for alleged fraud. The Senate's unanimous opposition to a pardon for FTX founder Sam Bankman-Fried showed that bipartisan appetite for accountability in the tech sector remains strong, at least when the fraud is big enough and public enough.

Phia called it a 'glitch', for seven months it was a feature

When reports first emerged in July that Phia was dropping more cookies than it should, the company reacted "with shock," the Post reported. Phia released a statement saying it had learned of the issue "within the last 24 hours" and pledged to fix the "glitch."

Bloomberg's August 11 report dismantled that timeline. Internal records showed the cookie-dropping practice traced back to at least December, a span of roughly seven months. Gates' own Slack message from December 18 confirmed she was not only aware of the practice but actively managing it. The gap between what Phia told the public and what its own records show is not a matter of interpretation. The company said 24 hours. The documents say seven months.

In a statement to the Post, a Phia spokesperson said the offending features were removed on July 7 and that the company is "reviewing every transaction" and has "already begun issuing all transaction reversals to brand partners as a result of any misattribution." The spokesperson added that Phia is "hiring a head of compliance to make sure something like this never happens again."

"We will learn from this and want to ensure our users have the best possible shopping experience, with features like our new digital closet and more to come."

The statement did not address the seven-month timeline, the Slack messages, or the toggle feature. Whether the company has identified a compliance hire or is still searching remains unclear.

Attorney warns cookie stuffing carries serious federal exposure

Ariel Givner, founder and principal attorney at Givner Law, posted a warning on X about the legal risks Phia now faces. Her assessment was direct:

"It's typically treated as federal wire fraud in US courts. There's a possibility of a max penalty of up to 20 years prison + fines/restitution."

No government agency, not the Department of Justice, the FBI, or the Federal Trade Commission, has publicly announced a formal investigation into Phia or its co-founders. No charges have been filed. Givner's post is a legal characterization, not a confirmed prosecution. But the characterization carries weight: federal wire fraud is the statute prosecutors have used in past cookie-stuffing cases, and the maximum penalty is steep.

The FBI's recent launch of a "Most Wanted Fraudsters" list signals that federal law enforcement is actively expanding its public posture on fraud cases. Whether Phia's conduct draws that kind of attention remains an open question.

$30 million in celebrity backing, and a billionaire father

Phia raised $30 million in 2025 from a roster of high-profile backers that included model Hailey Bieber, reality-television matriarch Kris Jenner, and Spanx founder Sara Blakely. The funding round gave the startup significant resources and visibility. Gates, the daughter of Microsoft co-founder Bill Gates, whose net worth Forbes pegs at $108.4 billion, had publicly insisted she wanted to succeed without her billionaire parents' help, telling interviewers she had "such a desire to prove myself."

Her father's own relationship with government scrutiny has drawn attention in recent years. Sen. Rand Paul revealed during a hearing that Bill Gates held a top-secret Department of Energy security clearance for seven years, a disclosure that raised questions about the elder Gates' access to sensitive government programs.

The desire to build something independent is understandable. But the internal records suggest Phia's revenue growth was built, at least in significant part, on a mechanism that took credit for sales the company did not earn. When the mechanism was turned off, the revenue cratered. The company's own numbers tell that story more plainly than any outside critic could.

Cases like this test whether the justice system applies the same standards to well-funded, well-connected founders that it applies to everyone else. The tech industry has produced no shortage of figures who raised enormous sums, attracted celebrity investors, and then faced federal consequences when the gap between their public claims and internal reality grew too wide to ignore. A tech CEO recently charged with funneling U.S. equipment to Iran's nuclear program while building a $35 million mansion is only the latest reminder that wealth and connections do not immunize anyone from federal law.

Open questions remain

Several critical facts remain unknown. No total dollar figure for improperly claimed commissions has been disclosed. The full list of affected retailers has not been published. Whether Google Chrome or any other platform authority took formal action against Phia's browser extension is unclear. And the most consequential question, whether federal prosecutors will open an investigation, has no public answer yet.

Phia says it is issuing reversals and hiring compliance staff. Its co-founders' own messages, reviewed by a major news outlet, show they discussed and managed the very features the company later called a glitch. The timeline the company gave the public does not match the timeline in its own records.

Accountability means the rules apply to a billionaire's daughter the same way they apply to everyone else. If they don't, the system isn't broken, it was never honest to begin with.