Phoebe Gates, daughter of Microsoft co-founder Bill Gates, is facing renewed scrutiny over allegations involving Phia, the shopping startup she co-founded, after new reporting raised questions about how long the company knew its software could claim credit for sales it did not generate.
The latest coverage also has focused on whether the alleged conduct could expose Gates or others at Phia to criminal liability.
Gates has not been charged with a crime, and there is no public indication as of the time of publication that federal prosecutors have opened a criminal case against her.
What Triggered the Controversy
Phia is a shopping platform founded by Gates and Sophia Kianni that helps users find products and deals online. The company’s business model includes affiliate marketing, in which a company can receive a commission when its referral results in a purchase.
The controversy centers on Phia’s browser extension and a practice known as “cookie stuffing.” In affiliate marketing, tracking cookies can identify which affiliate referred a customer to a retailer. The alleged problem with Phia was that its software could place or trigger affiliate tracking information even when the user had not intentionally clicked a Phia affiliate link.
Affiliate-marketing researcher Ben Edelman independently examined Phia’s software and published a detailed technical analysis July 9. Edelman wrote that the “basic bargain of affiliate marketing” is that an affiliate earns a commission when it presents an offer, the user clicks, and the user makes a purchase.
Edelman said his testing found Phia’s software could generate affiliate clicks and tracking information without the corresponding user action.
He also found evidence that the relevant feature had been included in Phia version 1.9.33, released December 13, 2025, rather than being introduced only in a recent software update.
Phia Initially Called it a Software Problem
When Bloomberg first reported on the issue in July, Phia said it had recently learned that a software release was causing sales to be incorrectly attributed to the company.
The company said it worked to identify and resolve the problem after being contacted about it.
That explanation has since come under scrutiny.
Bloomberg’s subsequent reporting, published August 11, cited internal Slack communications and people familiar with the company and reported that Gates and Kianni had known about the disputed functionality for months.
According to the reporting, the founders were aware of the practice beginning in December 2025 — approximately seven months before Phia’s public explanation that the issue had resulted from a recent software release.
Internal Messages are Now Central to the Dispute
The reporting is significant because it raises a question beyond whether the software improperly attributed sales: When did Phia’s leadership know about the functionality, and what did they understand it was doing?
The reporting does not, by itself, establish that Gates personally committed criminal fraud. Establishing criminal liability would require prosecutors to prove the elements of an applicable offense, including the required intent.
That distinction is important because the current allegations concern both the conduct of Phia’s software and the knowledge of the company’s founders.
Why are People Talking About 20 Years in Prison?
The 20-year figure comes from federal wire-fraud law.
Under 18 U.S.C. § 1343, a person who uses interstate wire communications as part of a scheme to defraud can face up to 20 years in prison. The U.S. Department of Justice explains that prosecutors generally must establish a scheme to defraud, an intent to defraud, and the use of interstate wire communications to carry out the scheme.
Federal prosecutors have described the maximum penalty for a violation of Section 1343 as 20 years in prison in criminal cases.
But that does not mean Gates has been sentenced to, or is currently facing, a 20-year prison term.
There is no publicly announced federal indictment or criminal complaint against Gates related to Phia as of time of publication.
The New York Post reported this week that legal experts believe the maximum penalty would be unlikely to reflect what Gates would actually receive if a criminal case were ever brought and resulted in a conviction.
Phia has Taken Corrective Steps
Phia has said it removed the disputed features July 7 and is reviewing transactions to identify sales that may have been improperly attributed to the company.
The company also said it intends to reverse improperly attributed transactions and hire a compliance executive, according to reporting on its response.
The company’s affiliate relationships have also come under scrutiny.
Impact.com, a major affiliate-marketing platform, suspended Phia following the allegations, according to reporting about the company’s affiliate relationships.
The suspension is significant for Phia because affiliate commissions are part of the company’s business model. Phia itself says it earns revenue through affiliate links and receives a commission when purchases are made through its suggested links.
What Happens Next?
The next steps could occur on several fronts.
First, affiliate networks and merchants can review transactions. If transactions were improperly attributed, Phia could face demands to return commissions or other contractual consequences.
Second, the company could face civil claims. Retailers, affiliate networks, or other businesses that believe they suffered financial losses could potentially pursue contractual or other civil remedies.
Third, government authorities could investigate. The allegations could theoretically attract federal scrutiny if authorities believe there is evidence of an intentional scheme to defraud. However, there is currently no public announcement of a federal criminal investigation of Gates.
A criminal case would require substantially more than evidence that Phia’s software improperly placed affiliate cookies. Prosecutors would need to establish the legal elements of an offense and prove the case beyond a reasonable doubt.
What is Established — and What is Not
The available evidence establishes that Phia’s affiliate-tracking practices have been challenged by independent researchers and that the company’s software was capable of behavior that could improperly attribute sales to Phia. Edelman’s testing and technical analysis provide independently documented evidence concerning the software’s behavior.
Bloomberg’s later reporting adds allegations that Phia’s founders knew about the disputed functionality for months before the company publicly described the matter as a recent software problem.
What has not been established is that Gates has committed a federal crime, that she will be prosecuted, or that she will receive a 20-year prison sentence.
For now, the central issue is whether the allegations lead to further action against Phia, its founders, or the company by affiliate networks, business partners, civil litigants, or government authorities.
Provided by Dallas Express
