When PayPal acquired Honey for $4 billion in 2020, many wondered how a free browser extension that finds discount codes could command such a valuation. A deep examination of Honey’s practices reveals sophisticated mechanisms that turned a seemingly simple money-saving tool into a powerful revenue generator, often at the expense of the very ecosystem that helped it grow.

The Promise vs. The Reality

Honey built its user base through an extensive marketing campaign spanning thousands of YouTube videos and reaching billions of views. The message was compelling and consistent: Honey would automatically find the best discount codes available anywhere on the internet, saving users money with zero effort.

This marketing push worked remarkably well, with content creators enthusiastically telling their audiences that Honey would scour the entire internet for discount codes and apply the best ones automatically. The appeal was straightforward – why wouldn’t you want a free tool that saves you money?

The Partner Program Reality

However, examining Honey’s partner program reveals a different story. While Honey told consumers it was finding every possible discount code, it was simultaneously telling businesses something quite different. Honey’s partner program documentation and communications reveal that businesses joining the platform gained control over which discount codes Honey could share with users.

This meant that even if Honey knew about better discount codes, it would only show users the codes approved by its partner stores. This practice directly contradicted the marketing message that Honey would find users the absolute best deals available online. Instead, Honey was essentially operating as a controlled discount distribution platform for its partner stores.

The Affiliate Commission Mechanism

Perhaps the most significant aspect of Honey’s operation involves its interaction with affiliate marketing systems. When users install Honey, they grant it permission to modify their browsing data – a technically necessary but powerful capability that Honey uses in several important ways.

When a user clicks a content creator’s affiliate link and later uses Honey at checkout, the extension executes a sophisticated process:

First, it opens a small browser tab in the background. This tab loads briefly and modifies the user’s tracking cookies, replacing the original content creator’s affiliate information with Honey’s own. The tab then closes automatically, leaving most users unaware of what just occurred.

This process happens even when Honey finds no discount codes to apply. The result is that Honey claims the commission for the sale, despite not being the entity that actually referred the customer to the product.

Impact on Content Creators

The scale of this practice becomes apparent when considering Honey’s reach. According to available data, Honey was promoted in nearly 5,000 YouTube videos across approximately 1,000 channels, accumulating almost 8 billion views. Many of these same content creators who promoted Honey were unknowingly directing their audiences to install a tool that would intercept their future affiliate commissions.

The irony is striking: content creators enthusiastically promoted a tool that would later capture commissions from their own product recommendations. Even sophisticated operations like Linus Tech Tips, with their technical expertise and large team, took years to identify this behavior.

The Honey Gold Program

Honey further refined its revenue capture through the Honey Gold program (now PayPal Rewards). This program offers users points for purchases, but examination reveals it as another mechanism to ensure Honey captures affiliate commissions. Testing shows that when Honey claims a $35 commission through this system, it typically shares less than a dollar worth of points with the user.

The Partner Store Perspective

For partner stores, Honey’s pitch was compelling: join our platform, and you’ll gain control over which discount codes are shared with our users. This helped stores manage their discounting strategy while potentially preventing users from finding better deals elsewhere. However, this arrangement fundamentally contradicted Honey’s consumer-facing promise of finding the best possible deals.

The Broader Implications

Honey’s practices reveal how browser extensions can leverage their technical capabilities to redirect revenue flows in e-commerce. The extension’s ability to modify tracking cookies, combined with its massive user base acquired through influencer marketing, created a system that could effectively intercept commissions at scale.

The most concerning aspect is how this system operated largely invisibly to both consumers and content creators. Users installing Honey to save money were unknowingly participating in a system that could prevent them from finding better discounts while simultaneously redirecting commissions away from the content creators they trusted for product recommendations.

Looking Forward

The Honey case study demonstrates how technical capabilities granted to browser extensions can be used in ways that may not align with user expectations or transparent business practices. As browser extensions continue to play a significant role in online shopping, understanding these mechanisms becomes increasingly important for all participants in the digital marketplace.

PayPal’s $4 billion acquisition price for Honey now appears more understandable – not just as a valuation of a money-saving tool, but as recognition of a sophisticated system for revenue generation and marketplace control. This raises important questions about transparency in digital commerce and the role of browser extensions in shaping online shopping experiences.