23andMe, the DNA testing company famed for its saliva-based kits, has announced a court-approved reorganization plan to sell “substantially all of its assets.” This announcement is a huge breakthrough moment for the company. Since going public in 2021, it has faced challenges in its transition to a profitable business model. It’s a welcome development, coming after months of defeats. A reporting damaging data breach in 2023 uncovered the sensitive personal information of almost seven million customers, and its co-founder Anne Wojcicki recently stepped down as CEO.
Struggles and Setbacks
From the beginning, 23andMe has garnered millions of customers. Their state-of-the-art DNA testing kits provide interesting, informative discoveries about ancestry and genetic health predisposition. The company was off to an auspicious start, but soon faced difficulties. Then, as it expanded into health research and drug development, it found it difficult to turn a profit. Signs of the mounting pressure were seen when 23andMe cut 40 percent of its staff in November.
The company’s fiscal misfortunes were made worse by a massive data breach in 2023. In that time, hackers compromised the personal information of millions of customers, delivering a devastating blow to 23andMe’s reputation. This breach was a major hit against consumer trust and it only added to the company’s issues with growth.
Privacy Concerns and Legal Implications
Serious concerns arose after the bankruptcy and potential sale or other disposition of assets. In addition, people are more concerned about the privacy and security of genetic data today. New York Attorney General Letitia James referred to the bankruptcy announcement as “deeply troubling.” She implored users to remove their accounts and safeguard their information. California Attorney General Rob Bonta echoed these sentiments, advising Californians to direct 23andMe to delete their data and destroy any samples of genetic material held by the company.
“Given 23andMe’s reported financial distress, I remind Californians to consider invoking their rights and directing 23andMe to delete their data and destroy any samples of genetic material held by the company.” – California Attorney General Rob Bonta
The company’s new privacy policies have one privacy advocate losing their minds, too. In other words, it says that in the case of events like bankruptcy or sale of assets, their customer data could be sold or transferred as well. This has prompted concerns that personal genetic information could be at risk of being accessed or acquired inappropriately.
“unless you take action, there is a risk your genetic information could end up in someone else’s hands — and used in ways you had never considered.” – Geoffrey Fowler, The Washington Post’s tech columnist
Future Uncertainty and Potential Risks
Though the company is restructuring, it is reportedly still angling for a sale. Cybersecurity specialists have expressed alarm over the exposure of genetic material in this move. Brent Arnold, a Toronto-based lawyer and cybersecurity expert, warned of the dangers arising from the company’s financial situation.
“They’re probably not in as good a position to repel an attack as they would be when they were running with full funding.” – Brent Arnold, Toronto lawyer and cybersecurity expert
Sara Gerke, associate professor of law at the University of Illinois, criticized what she described as ineffectual systems to protect consumer privacy. What’s notable is how she undermined the measures and demanded improvements.
“the entire system itself has a lot of weaknesses and doesn’t protect consumers’ privacy properly.” – Sara Gerke, associate professor of law at the University of Illinois
So how has 23andMe taken on these issues directly. They guarantee that any buyer will have to follow all relevant laws regarding the treatment of customer data.
“any buyer of 23andMe will be required to comply with applicable law with respect to the treatment of customer data.” – 23andMe
Even if they’re following the law, experts caution that being legally compliant doesn’t mean your data can’t be sold to the highest bidder.
“it does not necessarily stop the sale of customer data to the highest bidder.” – Sara Gerke, associate professor of law at the University of Illinois
