23andMe, the prominent genetic testing company, is currently seeking buyers after filing for bankruptcy last month, raising concerns regarding the potential use of its extensive genetic data under new ownership. Co-founded in 2006 by former healthcare investor Anne Wojcicki, the San Francisco-based firm gained fame for providing genetic testing directly to consumers. At its peak in 2021, the company was valued at over $6 billion but now finds itself facing debts totaling $2.3 billion, with only about $126 million in cash available, necessitating additional funding.
This financial turmoil has been a long time coming; 23andMe struggled to achieve profitability since introducing its direct-to-consumer DNA test kits nearly two decades ago. Interest in its flagship product—a one-time genetic test—began to decline around 2019, and attempts to add consumer value through new services were insufficient. Compounding the issue, a data breach in October 2023 revealed personal details of certain users, leading to a $30 million settlement and deterring potential customers due to privacy concerns.
The company’s announcement of bankruptcy and search for buyers has increased anxiety among customers about the safety of its vast DNA database, leading cybersecurity experts to recommend that users delete their information. They cite risks including discrimination, potential for financial fraud, and even the creation of biological weapons stemming from misuse of genetic data. Despite these issues, 23andMe intends to continue operations until a buyer is secured, prompting a competitive race for its assets.
What Genetic Data Does 23andMe Collect?
To gather genetic data, 23andMe utilizes saliva samples provided by consumers through a collection kit containing a tube labeled with a unique 14-digit barcode. Once received, the sample undergoes visual inspection, and the barcode serves as the sole identifying information sent to the lab for DNA extraction. Following genotyping— the analysis of genetic variations affecting attributes and disease susceptibility—results are returned to 23andMe for interpretation.
23andMe offers individual genetic reports to customers who opt in to receive them and also uses anonymized data for research purposes. If customers consent, the company shares de-identified data with qualified researchers. While 23andMe publishes some research findings on its blog, such as insights about users being descendants of Mayflower passengers, the handling of its data has garnered scrutiny.
Buyer Compliance with Privacy Policy
Potential buyers of 23andMe must indicate their intention to adhere to the company’s privacy policy as part of the bidding process. However, nuances arise regarding the binding nature of these commitments. Experts have pointed out that once a company changes ownership, there is no legal requirement for the new owner to maintain the existing privacy policy. Concerns about how buyer compliance will be enforced linger, with experts warning of potential risks depending on who ultimately acquires the company.
Who is Interested in Buying 23andMe?
Anne Wojcicki has expressed interest in purchasing 23andMe as an independent bidder following her resignation as CEO. Other companies, including Nucleus Genomics and the nonprofit Sei Foundation, have also shown interest in acquiring the firm, viewing it as a significant opportunity to gain access to a substantial repository of consumer genetic data. Pinnacle, a data analytics company, has also publicly proposed a bid of $100 million.
The Value of 23andMe’s Genetic Data
The inherent value of 23andMe’s data is difficult to quantify but is viewed as highly significant, especially for pharmaceutical research. Experts emphasize that genetic data often contains early indicators of diseases and is regarded as attractive to companies seeking new data sources. The company’s extensive customer base and the accompanying demographic data further enhance the worth of this genetic information, which potential buyers estimate could be worth billions.
According to experts, 23andMe’s data is unique and revealing, providing a rich resource not just from genetic insights but also from self-reported surveys completed by users. This breadth of information generates interest from a multitude of stakeholders, including advertisers and health researchers. As buyers emerge, the implications for customer privacy and data security become increasingly pressing, leaving users to weigh the risks associated with their data being acquired by third parties.
