The firm 23andMe, one of the major genetic testing companies, has filed for Chapter 11 bankruptcy protection. The move aims to facilitate a sales process that would address the financial troubles currently besetting the company. The move comes on the heels of some years of money woes due largely to an inability to have customers come back as well as a huge 2023 data breach affecting nearly 7 million customer accounts.
Co-founder and ex-Chief Executive Anne Wojcicki has stepped down from her role to make a move on the company as a potential acquirer. Her bid to take the company private was rejected by the board of directors. She announced her bid on the company as part of the court-approved sale process.
The financial struggles of the company have also been driven by waning interest in buying its DNA-testing kits, which were once hugely popular. The value of the firm peaked at nearly $6 billion in 2021 before plummeting to below $50 million. 23andMe’s recent past is characterized by struggling to establish consistent revenue streams as well as creating sustainable research and therapeutic businesses.
The bankruptcy filing is accompanied by severe doubts over the fate of the sensitive genetic data of over 15 million users. Even as 23andMe has assured no change in its data management processes in the sale, experts in data privacy observe that federal law does not offer much protection for genetic data uploaded to private firms. The demand has been made for users to erase their genetic data from the website.
In 2023, 23andMe suffered a major data breach, which revealed the private information of millions of customers. The breach significantly damaged the company’s reputation and heightened data privacy issues. 23andMe resolved a subsequent lawsuit with a $30 million settlement after the breach.
The possible sale of 23andMe’s assets, including its enormous genetic database, has far-reaching implications for both researchers and consumers. The company has traditionally partnered with university teams on a vast range of topics, ranging from human evolution to genetics of disease susceptibility. But the future of such collaborations hangs in the balance.
As part of its bankruptcy proceedings, 23andMe has secured a commitment of approximately $35 million of financing to maintain business operations. The company intends to continue business as usual during the sales process. Despite these assurances, customers are cautioned to be cautious with their data and seek out means for its erasure.
In response to these events, California Attorney General Rob Bonta issued a consumer alert instructing residents to consider deleting their genetic information from 23andMe’s platform. This move is a reflection of growing concern over the security and privacy of genetic information in the hands of private companies that are going through financial distress.
