In short
The episode covers the “cookie-stuffing” controversy involving Fia (an online shopping assistant app/browser extension) and how it may have falsely claimed affiliate commissions. It explains affiliate marketing basics (retailers pay commissions when shoppers take intentional actions via referral links/coupon clicks) and details alleged tactics: background tab opening to drop cookies, “coupon auto drop” registering non-clicks, and “passive trigger” refreshing cookies every two hours without user action. Bloomberg Technology editor Olivia Solon reports the features were live for months (at least since December; disabled July 7) and that internal messages suggest co-founders Phoebe Gates and Sophia Kiani were aware and even discussed keeping cookies dropping. Key claims include that over half of revenue may have come from non-compliant techniques (Fia disputes the methodology), and that retailers/publishers may seek refunds and commission reallocation. Notable example: Honey (later acquired by PayPal) faced similar allegations.
Guests
Olivia Solon (reporter) and Sarah Holder (host).
Written by AI. May contain mistakes. Listen to the episode to check what was said.
Chapters
Tap a time to open that second in VOIntroduction to FIA
0:54 to 1:40
Overview of FIA's launch, investors, and founders including Phoebe Gates.
“Chat your symptoms and get virtual care 24-7.”
FIA's Business Model
1:40 to 2:55
Discussion on FIA's app functionalities and its financial success metrics.
“When a startup called FIA launched last year, billing itself as an online shopping assistant, it got a lot of attention right away.”
The Cookie Stuffing Controversy
2:55 to 4:02
Olivia Solon reports on FIA's misleading practices leading to controversy.
“She found that it was taking credit for purchases it didn't facilitate, using a tactic called cookie stuffing.”
Understanding Affiliate Marketing
4:02 to 4:50
Explaining the mechanics and implications of affiliate marketing and FIA's role.
“It's just the latest player in a vast industry known as affiliate marketing.”
FIA's Malpractice Uncovered
4:50 to 7:03
In-depth analysis of how FIA was manipulating cookies for commissions.
“you know a couple of percent through to like 15 percent depending on the type of product.”
Industry Reactions and Regulations
7:03 to 9:30
Discussion of industry reactions to FIA's practices and related regulations.
“It was mainly happening on a mobile browser.”
Further Investigations into FIA
9:30 to 14:00
Olivia continues investigation into FIA's practices and co-founders’ knowledge.
“And it was another browser extension supposedly offering discounts at the checkout.”
FIA's Controversial Features Explained
14:00 to 16:46
Learn about the questionable cookie-dropping features used by FIA.
“So this was going on for at least seven months.”
Co-founders' Awareness and Response
16:46 to 19:15
Discover what FIA's co-founders knew about their tactics and their reactions.
“Can you just read some of these Slack messages that you reviewed that indicate the level of understanding that these co-founders had about what was going on here?”
Retailers' Fallout and Revenue Implications
19:15 to 21:58
Explore the potential fallout for retailers and the financial impact on FIA.
“We're reviewing every transaction we're fully committed to and have already begun issuing all transaction reversals to brand partners as a result of any misattribution.”
Show all 13 chapters
Future Prospects for FIA
21:58 to 22:30
What lies ahead for FIA following the controversy and their new initiatives?
“So they'll have to, you know, build up trust again with retailers, build up trust with the affiliate, their affiliate networks, try and differentiate themselves in a way.”
Future Prospects for FIA
23:19 to 24:00
What lies ahead for FIA following the controversy and their new initiatives?
“helping you close deals faster with revenue agents and automations working around the clock.”
Future Prospects for FIA
24:04 to 24:34
What lies ahead for FIA following the controversy and their new initiatives?
“We learned how to love dogs from the dogs that loved us and waited for us to get home from school.”
Transcript
Automatic transcript. May contain errors.0:00Phoebe Gates:Everyone's talking about how AI is transforming work, especially in sales. While the landscape shifts, one thing remains the same, the thrill of closing a deal. Whether it's a gong or a confetti machine, every team has its celebration rituals. Adio is designed for that moment. It's the agentic CRM that turns customer signals into actionable insights, helping you close deals faster with revenue agents and automations working around the clock. You'll have everything you need to scale your go-to market efforts. Elevate your wins with Adio. Start your free trial at adio.com slash iHeart. Amazon Health AI presents Painful Thoughts.
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1:28Phoebe Gates:Wasabi Hot Cloud Storage, proud partner of iHeart Podcast Network.
1:34Sophia Kianni:Bloomberg Audio Studios.
1:37Phoebe Gates:Podcasts. Radio. News.
1:40Sophia Kianni:When a startup called FIA launched last year, billing itself as an online shopping assistant, it got a lot of attention right away.
1:48Olivia Solon:They had this whole list of their investors that looked like a sort of festival lineup.
1:52Sophia Kianni:That's Bloomberg technology editor Olivia Solon.
1:55Olivia Solon:They raise money from a bunch of celebrities and VCs, so notable capital, Kleiner Perkins, Coastal Ventures, but also Sydney Sweeney, Khloe Kardashian and Hailey Bieber. The founders were buzzy too. One of its founders is Phoebe Gates, who's the daughter of Microsoft co-founder Bill Gates. She went to Stanford, as did Sophia Kiani, who's the co-founder. The co-founders are sort of influencers and they also kind of do a podcast.
2:25Sophia Kianni:Welcome to The Burnouts, the podcast where we juggle launching a startup and surviving our 20s in New York City. FIA offers an app and a browser extension that promise to help online shoppers find deals on their favorite products. When shoppers use FIA to make a purchase, retailers give the company a cut of the sale. The startup has raised$43.5 million. And according to estimates from AppFigures, it's been downloaded over a million times in the past year. But last month, Olivia reported that Fia's success wasn't all that it seemed. She found that it was taking credit for purchases it didn't facilitate, using a tactic called cookie stuffing.
3:08Olivia Solon:You're only supposed to get the commission if the shopper takes, they make an intentional click on something. you've provided and that you had an influence over the sale in some meaningful way.
3:19Sophia Kianni:When Olivia brought her reporting to FIA, the company said that a recent update to their code base had caused the issue, that they'd been made aware of the problem within the past 24 hours, and that they'd already resolved it. But Olivia kept asking questions. And from her reporting, it appears there's more to the story. I'm Sarah Holder, and this is The Big Take from Bloomberg News. Today on the show, the cookie-stuffing controversy at FIA, and what the latest Bloomberg reporting suggests about how much its co-founders knew, and when they may have known it.
4:01Sophia Kianni:For all the excitement around FIA, the product it's offering isn't entirely new. It's just the latest player in a vast industry known as affiliate marketing.
4:12Olivia Solon:At its most basic, this is where retailers give a small commission to publishers or other people who refer shoppers to their websites. So that could be an influencer. It could be like a reviews website. I think a good example would be something like Wirecutter, which, you know, does reviews of products and then recommends those products to its readers. and when you click on a link from a Wirecutter review, a special little piece of code will be in the link and that will mean that if you then end up buying the product on Amazon or Walmart or wherever the product sold, Amazon or Walmart will pay Wirecutter a small commission and it's usually you know a couple of percent through to like 15 percent depending on the type of product.
4:54Sophia Kianni:Okay, tell me a little more about how this works, how a company like FIA makes money.
4:58Olivia Solon:The key thing about affiliate marketing is in order to get the commission, the shopper has to have taken an intentional action with your content so like you click on the link from wire cutter you read the review on wire cutter so you went to go and buy the thing and so fear is doing the same thing it has its own little app that has loads of fashion items and stuff and so you can click on a link from there and you end up being referred to the retailer's website it also has this thing called a browser extension which is a little program you add to your browser. And so as you're shopping around the internet, when you put something in your shopping cart, a little FIA pop-up appears and offers you coupon codes and says, do you want to use this discount code?
5:39Olivia Solon:And if you click on one of those discount codes, FIA is entitled to a commission. Any brand with a website is a part of their marketing strategy. And so FIA was part of a bunch of retailers like Gap, Nordstrom, I think Walmart, a bunch of their programs to receive commissions if they help drive a sale.
6:00Sophia Kianni:So Olivia, what did you find when you started looking into FIA's practices a little more closely?
6:06Olivia Solon:Because FIA has this browser extension, it's quite easy to observe how it operates. And you can see what's going on with the links as you click them to see whose affiliate code is appearing in those links. And that's responsible ultimately for determining the attribution for the sale and the commission. And when you look at the source code, which is public, and your colleagues analyze that source code, you can see the different features and how they are supposed to behave.
6:41Sophia Kianni:FIA was registering genuine clicks that users made using its online shopping tool.
6:45Olivia Solon:But what Fia was also doing was registering a click even when nobody had clicked on anything. So neither clicking on a link from the app or one of the coupon codes on the pop-up. It was just registering that someone had clicked, which then injects its own little cookie. And then what that does is allows it to take credit for the sale and then therefore the commission. It was mainly happening on a mobile browser. you'd just click onto a retailer's website and in the background it would just secretly open another tab. But in mobile you don't see the other tab behind it. And that tab was the thing that was registering the click.
7:23Olivia Solon:For FIA. For FIA, exactly. Even if you'd come to the website from Wirecutter or any other referrer. We ran tests across 50 or more websites and it was fairly consistently happening.
7:36Sophia Kianni:Another analysis by a competitor of FIA's, Capital One Shopping, came to similar conclusions.
7:43Olivia Solon:They were able to see that there was something unusual happening with the FIA cookie dropping.
7:50Sophia Kianni:You write about a type of cookie dropping called cookie stuffing. Can you explain what that term means and how common the practice is?
7:59Olivia Solon:So cookies are used in the affiliate marketing process to determine which referrer was the last click before a purchase was made. And so cookie stuffing is putting a cookie there when there hasn't been an intentional action from the shopper to click on a link intentionally or to click on a coupon. And sometimes it's done through weird pop-ups like ads and they all drop a cookie. Other times there's no interaction whatsoever. It's just sort of stealthily happening.
8:30Sophia Kianni:And what does it mean about FIA's business? It's claiming that it's driving some of the shopping that it hasn't been. It's claiming revenue from these retailers.
8:38Olivia Solon:Well, when we were first looking at it, we couldn't determine exactly what the contribution was. But what we could see was that it was reliably happening on mobile on almost every website. I think on every website we tested. these cookies were being dropped. So that meant that, you know, retailers who would have made the sale anyway. So if you just had an organic sale, people just visiting your website and buying stuff, they didn't come from any referral. Those retailers would have to be paying fear for that when they shouldn't, they didn't have to. Similarly, all the other referrers, the wire cutters, the social media influencers who were sending people to those websites were having their own kind of codes replaced by fears.
9:19Olivia Solon:So it was a kind of loss to those people as well.
9:23Sophia Kianni:Just to be clear, Olivia, what regulations exist here? Have other players been accused of this in the past?
9:29Olivia Solon:I think probably the most famous example was a company called Honey that got bought by PayPal for$4 billion. And it was another browser extension supposedly offering discounts at the checkout. And it was found to be doing cookie stuffing. So now there's this huge ongoing litigation against Honey, which PayPal now owns, and PayPal is denying the allegations. So the practice is a violation of contracts that FIA has with various commercial partners, including affiliate networks. And affiliate networks are the companies that sort of look over the entire landscape. They have the retailers as their partners, and then they figure out who was the last click and who therefore gets the commission.
10:14Sophia Kianni:So, Olivia, you do all this reporting. The story comes out. What was the reaction like from the industry and from users? Because I remember seeing it everywhere on X. People were really talking about this. People were shocked.
10:27Olivia Solon:Yeah, it got a lot of attention. And I guess that's probably partly because of who Phoebe Gates is. But when we went to the company, they downplayed it as a recent glitch. You know, we went to them, they said, oh, on the day you came to us, we'd actually already been notified by someone else. And as soon as we realized what was going on, we stopped the behavior, the feature, and we fixed it in 24 hours. At the time of the first article, we couldn't tell for sure when the feature had been switched on, even though we could see it was available in the code. so we kept on looking.
11:07Sophia Kianni:After the break, Olivia keeps on looking.
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Read the full transcript
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13:17Sophia Kianni:So, Olivia, after publishing your first story, you didn't stop reporting. What were the open questions that you were trying to answer about FIA and these practices?
13:28Olivia Solon:There were three main questions. How long had it been going on for? When did it start? The second question was, did the founders know about this? And then the third question was sort of how significant was this alleged activity to FIA's revenue? Was it a big proportion of revenue or just a small bit?
13:45Sophia Kianni:And you found some internal documents and had conversations with sources that shed light on some of those questions. What did you find?
13:55Olivia Solon:The main feature we thought was live since December definitely was live since December and was switched off on July 7th, which was the day that we got in touch with the company.
14:03Sophia Kianni:So this was going on for at least seven months.
14:06Olivia Solon:Yeah. There are a couple of other features we identified doing kind of similar things at slightly different points in the customer journey. Some of them had been live since October or November, I believe. We were also told by sources and have seen messages that indicate that both Phoebe Gates and Sophia Kiani, the co-founders, were aware of the features and in some cases seem to be proposing new ways of dropping cookies in ways that are non-compliant.
14:35Sophia Kianni:Your reporting suggests that there were three different features built into Fia's plugin that may have allowed the company to falsely claim credit for sales. Can you just walk me through these features? Right.
14:47Olivia Solon:So the first one was the open the tab in the background, quietly drop a cookie. Enable coupon auto drop was how it was described. And that was the one that was switched on in December. The second one, we don't have a name for it, but it was one where if you're on a merchant's website looking to buy something, fears pop up appears with a bunch of coupons. And if you click on anywhere on the website, whether it's to click back onto the merchant's web page or to try and close the pop up, it would register that as a click, which, again, it's not supposed to.
15:19Sophia Kianni:So if you're trying to close the pop up, that registers as a customer trying to use the service?
15:25Olivia Solon:Yes, exactly. Or if you're trying to just click back to get out of the way, I can't see anything on this page, on the rest of the page, it would register that. And then the third one was something called passive trigger, which would refresh FIA's cookie every two hours without the user doing anything at all. You know, there would have to be some kind of click event to start off that process. So it could have been a compliant click in the first place or it could have been a non-compliant one. But then every couple of hours, it would just refresh the FIA cookie. So if in the intervening time someone else's cookie had been placed because someone landed on the website from another referrer, it would get replaced again with FIA's after two hours.
16:07Olivia Solon:And so there's a lot of different ways they're doing it. Ultimately, they all lead to the same thing in that the cookie is dropped and that will lead them to taking the credit. So they're just taking every opportunity to drop their cookie so that nobody else can take the credit for that sale.
16:21Sophia Kianni:And what do we know about what FIA's co-founders knew about these features and how they were being used?
16:27Olivia Solon:From the conversations we've seen online, the messages and interviews we've done with people who have first-hand knowledge of the company, both of the co-founders seemed to be aware that they were using techniques that they shouldn't be using according to their commercial partners' terms of service.
16:46Sophia Kianni:Can you just read some of these Slack messages that you reviewed that indicate the level of understanding that these co-founders had about what was going on here? Yeah.
16:58Olivia Solon:So back in December, we've seen messages where Phoebe Gates is talking to her technical team and she's kind of concerned because the company's not capturing every single transaction that's being made through Etsy. They're not making as much revenue as they'd expected in the week that she's discussing. And this is late December. and so she says can you confirm autopop for cookie drop is live on all sites with a coupon to confirm we're monetizing on all gmv which means gross merchandise value um through those and so what she's saying there is she wants to make sure that when the when the fear pop-up appears on a website with the various coupons at that point a cookie's being dropped um and so whether or not someone's clicking on the coupons they're still dropping the cookie we went to them for comment they added context that there was a problem with this pop-up that meant that they might have been losing legitimate commissions as well.
17:52Olivia Solon:I think we you know at the beginning we weren't entirely sure whether this was just like maybe some developer who was just adding these tools to make him look like he was or she was looking like they were performing better within the workplace. I think the messages we've seen show just how hands-on Phoebe and Sophia were with the startup and that they knew about all the various techniques being used.
18:16Sophia Kianni:Olivia, you end your story by quoting one of these Slack messages that the co-founder, Sophia Chiani, sent to a colleague who had written to her about one of the cookie drop functions you exposed. Can you just read it to us?
18:28Olivia Solon:So Sophia is responding to an engineer who's just talked about the passive trigger, which is the tool that drops the cookie every two hours automatically. And he says it's working pretty well. So another feature that she was discussing wasn't really that necessary. And Sophia responds, that makes sense. Yeah, just whatever we can do to keep these cockies dropping will be amazing. Thank you.
18:53Sophia Kianni:I want to spend a little more time on Fia's response, though. How did they explain these tactics, the timeline, and these co-founders' knowledge of what was going on?
19:04Olivia Solon:Fear hasn't provided us with a huge amount of clarity on the timeline. We went to them for comment and their response was, Any features causing misattributions were immediately removed over a month ago on July the 7th. We're reviewing every transaction we're fully committed to and have already begun issuing all transaction reversals to brand partners as a result of any misattribution. And we are hiring a head of compliance to make sure something like this never happens again. So they didn't deny the existence of these features, but they're not really being drawn on any detail into how long they've been going on for.
19:40Sophia Kianni:So what kind of fallout can you expect from this? How might retailers respond, for example?
19:46Olivia Solon:Well, retailers will want to get refunds for any sales that they would have made anyway. Right.
19:52Sophia Kianni:After the first story, that was something that happened, right? Fia had to pay back these retailers for purchases that were made within a certain time period.
19:59Olivia Solon:Exactly. And I think that time period is going to have to be a little bit longer than they had previously disclosed. So they'll have to pay more back to the retailers, I would suspect. They may have to pay money back to other publishers or at least the retailers may have to do that. So other influencers, other websites that have been referring people will feel hard done by. We've spoken to a couple of them actually who say that they were not getting as many commissions as they expected. and some of them have already had in the sort of last, I don't know, month or so, that's a time period where the affiliate networks hold on to the commissions before distributing them out to the publishers.
20:37Olivia Solon:So of the commissions that are still being held by these sort of middlemen, those ones are being reallocated at least by some of the big networks. They're figuring out who the rightful referrer was and paying them the commission. But once the money's gone to fear, it's then up to fear to unpick all of that. The amount of revenue they seemingly generated from these features is interesting. We have reporting that indicates that more than half of the revenue came from these non-compliant techniques. And that's according to a post that we saw relating to their total sales that were made in June through their retail partners.
21:17Olivia Solon:Since then, the company has told us that that post was inaccurate and used a flawed methodology. And so they're saying that that was an overestimation, but they haven't told us the exact proportion of their revenue that did not align with industry standards.
21:32Sophia Kianni:And what's next for FIA here? They disabled these features in early July, according to their statement. How has their business been impacted as a result if this was driving significant revenue?
21:45Olivia Solon:Well, at the moment, we're still in the sort of fallout phase where people are figuring out what's going on. So some of the ad networks have sort of deplatformed FIA for a while while they work out exactly what was going on. They may well take them back in, but for now they're sort of keeping their distance. So they'll have to, you know, build up trust again with retailers, build up trust with the affiliate, their affiliate networks, try and differentiate themselves in a way. They have just launched some kind of digital wardrobe where you can kind of display your clothes in an app. The company is still launching new products.
22:21Olivia Solon:It's still innovating. So it's quite difficult to know what lies ahead for them.
22:30Sophia Kianni:This is The Big Take from Bloomberg News. I'm Sarah Holder. To get more from The Big Take and unlimited access to all of Bloomberg.com, subscribe today at Bloomberg.com slash podcast offer. If you liked this episode, make sure to subscribe and review The Big Take wherever you listen to podcasts. It helps people find the show. Thanks for listening. We'll be back tomorrow.
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From the publisher
The online shopping app Phia raised over $43 million and captured media attention for its A-list investors and its high-profile co-founders — Phoebe Gates, daughter of Bill Gates, and her college roommate and podcast co-host Sophia Kianni.
But Bloomberg reporting suggests that Phia was pushing features that took credit for sales it didn’t drive. On today’s Big Take podcast, Bloomberg technology editor Olivia Solon shares her reporting on Phia and what the startup’s founders may have known about those features.
Read more:
- Gates Heir’s Shopping App Claimed Sales It Didn’t Drive
- Phoebe Gates Knew Phia Shopping App Took Credit for Sales It Didn’t Drive
We have a special Bloomberg subscription offer for podcast listeners at Bloomberg.com/podcastoffer.
Hosted by Sarah Holder; Produced by Julia Press; Reported by Olivia Solon.
Fact-checking by Victor Swezey and Brunella Tipismana Urbano; Engineering by Alex Sugiura and Emma Munger.
Senior Producer and Editor: Naomi Shavin; Deputy Executive Producer: Julia Weaver. Executive Producer: Nicole Beemsterboer.
See omnystudio.com/listener for privacy information.
