Bill Gates's daughter knew her start-up was 'cookie stuffing'
What's the story
Phia, the shopping start-up co-founded by Bill Gates's daughter Phoebe Gates and Sophia Kianni, is under fire for its controversial business practices. The company has been accused of "cookie stuffing," a method where it takes credit and commission for affiliate purchases without actually generating them. This practice was first reported by Bloomberg earlier this year.
Industry impact
What is 'cookie stuffing' and why is it a concern?
Cookie stuffing is a contentious practice that can lead to lawsuits against start-ups. It is considered unfair as it diverts referral revenue from other affiliate marketers.
When Phia joined a marketplace, it signed a contract prohibiting cookie stuffing due to its unfair nature.
However, Bloomberg's investigation revealed that Gates and Kianni were aware of their start-up's involvement in this practice as early as December last year.
Revenue drop
Significant impact on sales
The practice of cookie stuffing accounted for a significant portion of Phia's sales.
However, the company witnessed a major decline in daily revenue after it stopped this practice.
The investigation also revealed that retailers like Nike and Nordstrom were affected by these actions.
Despite initially calling cookie stuffing a bug, Bloomberg later reported it was an intentionally designed feature that could be toggled on or off at will.
Company statement
Phia to review every transaction
In light of the new allegations, a Phia spokesperson told Bloomberg that while some claims were refuted, the company would "learn from this."
The firm also said that any features causing misattributions were removed on July 7.
It is currently reviewing every transaction and has started issuing transaction reversals to brand partners due to any misattribution.
Future plans
Phia promises to hire head of compliance
Phia has also promised to hire a head of compliance to prevent such incidents from happening in the future.
The company was launched last April as a more effective shopping platform, similar to Google Flights.
However, since then it has faced several controversies, including secretly collecting sensitive data and tracking user behavior across the web.