The genetic testing company 23andMe has filed for Chapter 11 bankruptcy, a notable decline for a firm once valued at $6 billion in 2021. The filing comes in light of ongoing financial challenges, a significant leadership overhaul, and increasing concerns regarding the protection of customer genetic data. As the company embarks on a court-supervised sale process, many customers are left wondering what this means for their sensitive information and what steps they can take to safeguard it in this new context.
| Article Subheadings |
|---|
| 1) The fall of 23andMe: A timeline of challenges |
| 2) 23andMe board seeks to maximize value through a court-supervised sale |
| 3) What happens to your genetic data during bankruptcy? |
| 4) Steps to protect your genetic data |
| 5) Kurt’s key takeaways |
The fall of 23andMe: A timeline of challenges
23andMe’s trajectory has been marked by a series of serious setbacks leading to its current bankruptcy situation. Once valued at $6 billion in 2021, the company has faced a series of challenges that have contributed to its decline. In 2023, a significant data breach compromised the genetic and personal information of approximately 7 million users. This cyberattack not only led to legal actions against the firm but also triggered reputational harm that has proven difficult to recover from.
Moreover, the company experienced a notable leadership change when CEO Anne Wojcicki resigned during the bankruptcy announcement, hinting at her potential interest in purchasing the company herself. The financial troubles are further underscored by the plummeting stock price, which fell from over $300 per share to less than $1, revealing the dire state of the organization’s fiscal health. Initiatives to cut costs followed, culminating in a 40% workforce reduction announced in November 2024.
By March 23, 2025, 23andMe pursued voluntary Chapter 11 proceedings in the U.S. Bankruptcy Court for the Eastern District of Missouri. This legal move was aimed at facilitating a sale process designed to optimize the value of the business. Despite the alarming nature of these developments, the company has reassured users that there will be no immediate changes regarding how customer data is stored or managed, although concerns continue to loom about the potential sale of genetic information.
23andMe board seeks to maximize value through a court-supervised sale
In statements surrounding the bankruptcy filing, Mark Jensen, the chair and member of the special committee of the board of directors of 23andMe, emphasized that a thorough evaluation prompted the decision to engage in a court-supervised sale process. “We expect the court-supervised process will advance our efforts to address the operational and financial challenges we face, including further cost reductions and the resolution of legal and leasehold liabilities,” Jensen explained.
He further acknowledged the dedication of the workforce and reassured them of the company’s commitment to safeguarding customer data, insisting that user data management will remain transparent throughout this transition. “Data privacy will be an important consideration in any potential transaction,” he added, conveying a cautious optimism about the future of 23andMe’s mission of facilitating access to genetic information for customers and patients.
What happens to your genetic data during bankruptcy?
The bankruptcy process can complicate the handling of sensitive customer data, as the assets of a company, including genetic data, can be incorporated into the sale. Various state privacy laws, like California’s Genetic Information Privacy Act, demand explicit consumer consent before transferring genetic data to another party. However, despite these legal protections, there exists a risk of misuse or inadequate protection during the transition period.
In a reassuring statement, 23andMe has asserted that any new owner will be mandated to comply with existing privacy laws, but the intrinsic value of genetic data poses ongoing risks if not diligently safeguarded. Compounding this situation, shortly before the bankruptcy filing, 23andMe updated its terms of service, introducing new legal stipulations that could inhibit individuals’ ability to pursue lawsuits, effectively funneling claims into binding arbitration unless a user opts out within 30 days.
Customers are urged to proactively protect their rights by opting out of these terms by emailing [email protected] with a notification from the email account linked to their profiles. This measure is crucial for those concerned about preserving their legal options moving forward.
Steps to protect your genetic data
For individuals who are users of 23andMe or are contemplating using similar genetic testing services, maintaining the security of sensitive genetic information is paramount. Here are several recommended steps:
1) Opt out of arbitration: Users should notify 23andMe of their intention to opt out of any arbitration agreements within 30 days of first use by sending an email to [email protected].
2) Review privacy preferences: Regularly assessing privacy and data-sharing settings can help users ensure these settings are in line with their comfort levels concerning data use.
3) Limit research participation: Individuals should consider disabling participation in research or product development initiatives if there are concerns about how their data might be utilized.
4) Download and secure your data: Before account deletion, downloading genetic records for safe storage on encrypted devices or cloud services is advisable.
5) Request data deletion: Users can seek the deletion of their data by accessing account settings and requesting the destruction of any physical samples alongside digital data.
6) Use strong passwords and multifactor authentication: Creation of robust, unique passwords for each account is vital, in addition to enabling two-factor authentication wherever available to prevent unauthorized access even if passwords are compromised.
7) Monitor for suspicious activity and use identity theft protection: Signing up for identity theft protection services can help users stay informed about their personal info. These services often offer crucial support in the event of identity theft and may include insurance to cover potential losses.
Kurt’s key takeaways
The recent bankruptcy of 23andMe stands as a cautionary tale reflecting the risks associated with sharing sensitive genetic information. Despite the company’s commitment to uphold privacy standards during this unsettling time, consumers must remain proactive to shield themselves against potential privacy risks. The ownership transfer of valuable genetic data highlights the importance of taking control of one’s own data, whether through adjusting privacy settings, requesting account deletions, or opting out of imposed legal terms.
| No. | Key Points |
|---|---|
| 1 | 23andMe has filed for Chapter 11 bankruptcy amid financial difficulties and leadership changes. |
| 2 | A significant data breach in 2023 has worsened the company’s reputation. |
| 3 | Customers are urged to opt out of arbitration agreements to protect legal rights regarding their genetic data. |
| 4 | 23andMe maintains that customer data security will be a priority during the bankruptcy process. |
| 5 | Users should take proactive steps to protect their privacy and sensitive information. |
Summary
The bankruptcy of 23andMe underscores the essential considerations consumers must reflect upon regarding the use of genetic testing services. With heightened scrutiny over data protection amid corporate turmoil, users of such platforms should remain vigilant and informed about their rights. By proactively managing their genetic data and understanding the implications of the company’s financial actions, consumers can better navigate potential risks associated with the ongoing situation at 23andMe.
Frequently Asked Questions
Question: What are the implications of 23andMe’s bankruptcy for customer data?
23andMe’s bankruptcy may affect the handling of customer data as it can be included in the sale of company assets. There are laws that protect genetic data, but risks remain regarding its transfer and potential misuse.
Question: How can I protect my genetic data during this time?
Customers can protect their data by opting out of arbitration agreements, reviewing privacy preferences, limiting research participation, and requesting data deletion if preferred.
Question: What legal protections are in place for genetic data?
Many states have laws requiring explicit consent before transferring genetic data to new owners. However, customers should remain proactive in safeguarding their rights.
