Phia's Affiliate Scheme Was No Accident, Internal Messages Show

A Feature, Not a Bug

The shopping startup Phia is facing renewed scrutiny after leaked internal communications contradicted its public explanations about affiliate commission practices. According to sources familiar with the matter, co-founders Phoebe Gates and Sophia Kianni were aware their platform was engaging in cookie stuffing since at least December 2025, several months before the company publicly acknowledged the issue.

Cookie stuffing refers to the practice of claiming affiliate commissions for purchases a platform did not actually influence. In affiliate marketing, when a user clicks a referral link and later makes a purchase, the referring party earns a commission. Cookie stuffing exploits this system by inserting tracking cookies without genuine user interaction, effectively hijacking credit from legitimate referrers.

At DailyTechWire, we've tracked the evolution of affiliate commerce infrastructure across Asia and North America, and cookie stuffing remains one of the most contentious practices in the space. It typically violates marketplace contracts and can trigger legal action from both competing affiliates and the merchants themselves.

The Timeline Doesn't Add Up

When investigators first documented Phia's practices earlier this year, a company spokesperson claimed the team only learned of the problem when contacted by journalists. That narrative has now unraveled. Internal Slack messages show Gates and Kianni discussing cookie stuffing mechanics with engineers and other executives as far back as December, according to people with direct knowledge of the conversations.

The leaked exchanges reveal that the functionality was not an inadvertent technical flaw but a deliberately engineered feature that could be toggled on or off. In early July, Phia described the issue as a "bug" in public statements. The internal record paints a different picture: a calculated decision to capture affiliate revenue through methods that most marketplaces explicitly prohibit in their terms of service.

The financial impact was significant. After Phia disabled the cookie stuffing mechanism in early July, the company experienced a sharp decline in daily revenue, indicating that a substantial portion of its sales volume depended on the contested practice.

Affected Merchants and the Compliance Gap

Major retailers including Nike and Nordstrom were among the merchants impacted by Phia's affiliate attribution methods. In many affiliate programs, merchants rely on platform partners to operate transparently and honor attribution rules. When a platform violates those terms, it not only siphons revenue from legitimate referrers but also undermines trust across the entire affiliate ecosystem.

Phia has committed to reversing all transactions linked to misattribution and is now hiring a head of compliance. In a statement, the company said it removed the problematic features on July 7 and is reviewing every transaction to issue reversals to brand partners. The company also stated it would "learn from this incident."

For a startup that launched just over a year ago with backing tied to high-profile names, the compliance gap is striking. Phia positioned itself as a price-comparison tool for shopping, akin to flight search engines that aggregate offers across multiple sources. The pitch was straightforward: help consumers find the best deal. But the business model leaned heavily on affiliate commissions, and the leaked messages suggest the founders understood the mechanics of their revenue capture well before external scrutiny arrived.

A Pattern of Controversy

This is not the first time Phia has drawn criticism over its data and business practices. Earlier reports documented that the app was collecting extensive behavioral data, tracking user activity across the web and transmitting it to company servers without clear disclosure. The startup also faced questions about listing brands on its platform without their knowledge or explicit partnership agreements.

By mid-year, Phia had lost nearly half its full-time staff, a signal that internal confidence may have been shaken well before the public controversy erupted. Investors, according to industry sources, grew uncomfortable with how aggressively the company pursued affiliate marketing tactics, particularly methods that skirted the edges of standard practice.

The Broader Implications for Affiliate Commerce

Affiliate marketing is a core revenue engine for e-commerce platforms across Asia and the West, but it depends on trust and transparent attribution. When platforms game the system, the entire model suffers. Smaller content creators and niche affiliates, who rely on legitimate referrals for income, are the first to lose out when a well-funded competitor deploys cookie stuffing at scale.

In Southeast Asia and India, where affiliate commerce is booming alongside the rise of social commerce and influencer-driven sales, regulators are beginning to scrutinize attribution practices more closely. Phia's case may accelerate that trend. If high-profile startups with access to capital and legal resources are willing to push boundaries, smaller players may feel pressure to follow, or risk being outcompeted by those who do.

The challenge for platforms like Phia is that affiliate networks and merchants have long memories. Once a platform is flagged for questionable practices, re-entry into partnerships becomes difficult. Reversing transactions is a necessary step, but rebuilding trust with retail partners and competing affiliates will take considerably longer.

What Comes Next

Phia's commitment to hiring a compliance lead and auditing past transactions is a step toward damage control, but the leaked messages raise questions about governance and oversight at the founding level. When leadership is directly involved in discussing practices that later become public controversies, the issue is not merely operational but cultural.

For the broader startup ecosystem, Phia's trajectory is a reminder that growth tactics matter as much as growth itself. Affiliate revenue can scale quickly, but if the foundation is contested or contractually suspect, the scaling only amplifies the eventual reckoning. The company now faces the task of demonstrating that its corrective measures are genuine and that future revenue will come from methods that partners and users can trust.

Whether Phia can recover depends on more than public statements. It will require transparency around past transactions, sustained compliance infrastructure, and a willingness to operate within the norms that make affiliate commerce viable for everyone involved. The startup's next chapter will test whether its founders are prepared to lead that shift.