In a shocking turn of events, 23andMe has filed for bankruptcy. The genetic testing giant, once valued at $6 billion after going public in 2021, encouraged millions to spit in tubes and discover their ancestry. Now, 23andMe is bankrupt and faces financial collapse. As a result, this crisis puts the DNA data of over 15 million customers at risk.
The Fall of a Genetic Testing Giant: 23andMe Bankruptcy Explained
23andMe announced this week it had entered federal bankruptcy proceedings. The company hopes to find a buyer to solve its financial problems. Indeed, the 23andMe bankruptcy has been brewing for years. Its main business problem was simple: customers rarely returned after their first DNA test purchase. Warning signs appeared last November when 23andMe laid off more than 200 employees. This cut represented about 40% of its staff. Moreover, the company claimed these cuts would “substantially reduce operating expenses and result in annualized cost savings of more than $35 million.”
On top of money problems, 23andMe suffered a massive data breach less than two years ago. The hack exposed 6.9 million customer accounts. Naturally, this security failure further damaged trust in the company. Meanwhile, Anne Wojcicki has stepped down as CEO but remains on the board. She tried to buy the company herself. However, the board rejected her offer earlier this month.
Your DNA Data: Who Owns It Now?
23andMe going bankrupt has sparked widespread fear about customers’ genetic information. 23andMe claims data privacy will be an “important consideration” in any sale. Experts warn that U.S. laws offer minimal protection for genetic data shared with private companies. “The scale of how much highly sensitive data 23andMe has is unique,” said Suzanne Bernstein, counsel at the nonprofit Electronic Privacy Information Center.
Unlike medical records at doctors’ offices, DNA data collected by companies like 23andMe lacks HIPAA protection. The Genetic Information Nondiscrimination Act does offer limited protection. Specifically, it stops employers and health insurance companies from using genetic information against you. This represents nearly all the protection federal law provides.
Some states have created their genetic privacy laws to fill these gaps. A study found at least 11 U.S. states have such legislation. Therefore, these laws could become more important as bankruptcy proceedings continue. They typically allow users to request data deletion and require police to get warrants before accessing genetic information.
The Bankruptcy Process and Next Steps
23andMe now seeks court permission to sell most of its assets. If approved, the company will collect bids over 45 days. After that, this could trigger an auction if several qualified buyers show interest. The company has secured $35 million in financing. This money will maintain operations during this period.
In its bankruptcy announcement, 23andMe declared it “intends to continue operating its business in the ordinary course throughout the sale process.” Additionally, the company stressed, “there are no changes to the way the Company stores, manages, or protects customer data.” Furthermore, the company appointed Joe Selsavage as Interim CEO. He previously served as Chief Financial and Accounting Officer. Also, Matt Kvarda will serve as Chief Restructuring Officer to guide the company through bankruptcy.
Protecting Your Genetic Information
23andMe confirms it will stay open during bankruptcy proceedings. Customers can still delete their data and close their accounts. California Attorney General Rob Bonta urges residents to “consider invoking their rights and directing 23andMe to delete their data and destroy any samples of genetic material” the company has.
Privacy experts recommend immediate action. For instance, Bernstein advises customers to “delete their data, request that their saliva sample be destroyed and revoke any permissions they may have given to use their genetic information for research.” Even before bankruptcy, 23andMe shared anonymized customer data with other companies.
For years, it provided genetic information to drug giant GSK to help develop new medicines. In addition, University of Iowa law professor Anya Prince notes, “Everybody’s worried about what a new company can do with the data, and that is a concern, but frankly some of the things that people are worried about, 23andMe already can do or already does.”
The Future of Genetic Testing After 23andMe Bankruptcy
23andMe going bankrupt marks a turning point for consumer genetic testing. What began as an exciting ancestry discovery tool has exposed the risky reality of businesses built on personal genetic data. The company now searches for a buyer while managing its bankruptcy proceedings. Consequently, this situation highlights how vulnerable our biological information becomes in the digital world.
For the millions who sent their DNA to 23andMe, the bankruptcy delivers a stark lesson. We often lose control over our genetic information after sharing it with private companies. Many will watch this case closely. They hope to see new rules emerge for handling genetic information when companies declare bankruptcy.
As genetic testing evolves as both science and business, we need stronger protections. In the end, these safeguards must keep our most private biological data secure, regardless of whether a company like 23andMe is bankrupt or thriving. The 23andMe bankruptcy serves as a crucial reminder that our most sensitive information requires better protection.
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