Bill Gates’ Daughter Faces a Possible 20 Years in Prison Over ‘Cookie Stuffing’ Scandal
Phoebe Gates, the daughter of Microsoft co-founder Bill Gates, could face significant financial penalties and civil lawsuits over allegations that her AI-powered shopping startup engaged in a controversial affiliate-marketing practice known as “cookie stuffing,” according to legal experts.
Gates, 23, co-founded Phia with fellow Stanford University alum Sophia Kianni. The company launched its consumer app and browser extension in April 2025 and uses artificial intelligence to help shoppers compare products and prices.
The startup is now facing scrutiny following a Bloomberg report alleging that Phia’s browser extension could automatically place affiliate tracking cookies even when users had not performed the actions typically required for the company to claim credit for a purchase.
The alleged practice affected affiliate relationships involving major retailers including Nike, Nordstrom and Gap, according to Bloomberg.
None of those companies had publicly commented on the allegations as of Thursday.
The practice at the center of the controversy is commonly known as “cookie stuffing.”
Affiliate marketing generally allows websites, creators and other businesses to receive commissions for directing customers to retailers. Tracking cookies are used to determine which affiliate generated a particular sale.
Cookie stuffing can manipulate that process by placing an affiliate tracking cookie on a shopper’s device without the affiliate actually generating the customer’s purchase, potentially allowing it to collect commissions for sales it did not produce.
Bloomberg reported that internal Slack communications and source code indicated Phia’s founders were aware of automatic cookie-placement features months before the company publicly disclosed problems with its attribution system.
Phia has disputed aspects of Bloomberg’s reporting and has not been charged with any crime.
Despite speculation about potentially serious criminal consequences, legal experts told the New York Post that financial penalties and civil litigation are more likely based on the information currently available.
Star Kashman, founding partner of Cyber Law Firm, noted that federal wire fraud can carry a statutory maximum sentence of 20 years in prison.
However, prosecutors would first have to establish that Gates knowingly participated in a deliberate scheme to defraud others.
“This can’t be a careless or negligent error,” Kashman told The Post.
“Wire fraud would have to paint a picture of a knowing scheme that is organized to defraud these individuals (affiliates, businesses etc.) of their money,” she added.
Kashman stressed that criminal prosecution is not automatic even if evidence of intent exists.
She also said it would be “very unlikely” for a young entrepreneur without a prior criminal history to receive the maximum sentence for a first offense.
“The more likely penalty here is financial penalties,” Kashman said.
Companies or other parties able to demonstrate that they suffered financial losses because of Phia’s alleged practices could potentially pursue civil claims involving commissions, contracts, privacy or consumer-protection laws, according to Kashman.
“If proven to be true, I see it as a likely possibility that herself and/or her company will be taken to court over this alleged scheme,” she said.
Advertising researcher Ben Edelman, who reviewed Phia’s practices, told the Post that he prefers describing the alleged behavior as “forced clicks” when browser-extension software is involved, although he acknowledged that the distinction from cookie stuffing could be minor.
“There is no proper reason for an extension to invoke an affiliate link, and place an affiliate cookie, when the user hasn’t meaningfully interacted with it,” Edelman said.
He argued that such practices could substantially increase affiliate revenue while imposing additional costs on merchants.
Attorney Richard Newman, who has represented companies in the performance-marketing industry for more than two decades, said cookie stuffing is generally prohibited under affiliate agreements.
However, Newman said disputes involving the practice are typically handled as contractual matters between private parties.
“They lose their commissions,” Newman said of affiliates found to have violated such rules.
The controversy could already be having significant financial consequences for Phia.
Bloomberg reported that the startup’s average daily revenue dropped from approximately $80,000 to between $10,000 and $28,000 after the disputed features were disabled.
Phia has said the decline was also attributable to its decision to turn off most of its monetization efforts.
For now, Gates has not been charged with wire fraud or any other crime. The possibility of a 20-year prison sentence represents the statutory maximum for a potential wire fraud charge discussed by a legal expert.
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