The well-known DNA testing company 23andMe has officially filed for bankruptcy protection, marking a significant turning point in its operations. Co-founder and CEO Anne Wojcicki has resigned from her position effective immediately as the company embarks on a court-supervised sale process.
Company’s Future amidst Financial Challenges
In a recent press release, 23andMe assured its customers that it intends to continue operations during the sale process, emphasizing that there will be no alterations to how the company stores, manages, or safeguards customer data. However, the Attorney General in California, the company’s home state, issued a consumer alert recommending that users delete their data from the platform due to the company’s “reported financial distress.”
Once celebrated for its saliva-based test kits, 23andMe saw its market valuation soar to $6 billion (£4.6 billion), buoyed by enthusiastic customers and investors. However, the firm has faced persistent challenges and has been struggling to maintain its viability. Founded in 2006, 23andMe went public in 2021, yet it has not reported any profits since its inception.
In September, the company reached a settlement in a lawsuit concerning a significant data breach in 2023, which compromised the privacy of nearly seven million customers. Hackers accessed sensitive information, including family trees, birth years, and geographical data, by exploiting customers’ outdated passwords. Fortunately, the stolen data did not involve DNA records, as confirmed by the company.
Leadership Changes and Strategic Missteps
Following the breach settlement, 23andMe laid off approximately 200 employees, accounting for 40% of its workforce. Joe Selsavage, the company’s finance chief, has stepped in as the interim chief executive, while Wojcicki will retain her position on the board. She had previously sought to take the company private but was resistant to a third-party acquisition.
Despite having received endorsements from high-profile figures such as Oprah Winfrey, Eva Longoria, and Snoop Dogg, 23andMe has struggled to innovate its business model. After customers paid for DNA reports, many found little value in the service. Attempts to implement a subscription service did not yield the expected results, and ambitions to leverage its extensive data pool for drug development have also faltered.
Last summer, all but Wojcicki resigned from the board, expressing dissatisfaction over the lack of satisfactory buyout offers from her.
“We are committed to continuing to safeguard customer data and being transparent about the management of user data going forward,” said Mark Jensen, chair of the board.
He noted that data protection would be a key consideration in any potential sale. However, this assurance may not alleviate the concerns of customers regarding the future of the DNA data they shared with the company. In the UK, DNA data is classified as special category data under data protection laws, which provides specific legal safeguards in the event of the company’s bankruptcy or change of ownership.
Past experiences, such as with the DNA testing company Atlas Biomed, have left customers uncertain about the implications for their data when a firm ceases operations. Professor Carissa Veliz, author of Privacy is Power, highlighted the gravity of the situation by stating, “If you gave your data to 23andMe, you also gave the genetic data of your parents, your siblings, your children, and even distant kin who did not consent to that.”