23andMe, a household name in the world of DNA and genetic testing. It’s now engulfed in chaos after a massive 2023 data breach and then bankruptcy. This turbulence has ultimately resulted in the company’s March 2024 filing for bankruptcy. 23andMe is known for its large database, holding the genetic data of 15 million customers. With the company’s shift away from drug development, it seeks to pitch this vast trove of genetic data to other pharmaceutical companies and researchers. Its founder and CEO Ms. Anne Wojcicki has resigned amid these crises. Next, the company plans to sell its assets—including its wide DNA data caches—through a court-supervised process.
A Shift in Strategy
The economic downturn of 23andMe has led the company to reconsider its business plans going forward. Their track record shows a propensity to make big bets on drug development programs. The enormous costs of all these initiatives has compelled them to reconsider their plan. Going ahead, 23andMe plans to monetize its sizable database by licensing it out to drugmakers and research organizations. This shift aims to capitalize on the wealth of genetic information collected from its customers, which includes detailed reports on genetic predispositions and ancestry.
The firm was forced to undertake this shift after losing a third of its valuation. Since their debut on the NASDAQ in early 2021, it has dropped in value by more than 99% from its high of $6 billion dollars. The recent shift toward data-driven marketing is viewed as an astute strategic pivot to right the ship financially.
Leadership Changes and Legal Challenges
Anne Wojcicki's resignation as CEO adds another layer of complexity to 23andMe's ongoing challenges. Her exit comes on the heels of a string of strategic blunders and the fallout from a data breach exposing user data. The company has now settled a lawsuit related to this breach for $30 million. This most recent decision will only continue to sap its coffers.
The forced sale of 23andMe’s assets, including its valuable DNA data banks, will be carried out under the supervision of a court appointed receiver. Yet this decision raises serious ethical questions about what happens to the company’s customer data going forward. It further raises concerns about the privacy protections for users who participated in its research program. About 80% of 23andMe’s customers have agreed to join this program, providing useful genetic data that will assist with furthering research.
When pressed regarding ongoing privacy concerns, Andy Kill, a spokesperson for 23andMe stated that, “23andMe takes the privacy of our customers very seriously.
"Our own commitment to apply the terms of our privacy policy to the personal information of our customers in the event of a sale or transfer is clear: the 23andMe Terms of Service and Privacy Statement would remain in place unless and until customers are presented with, and agree to, new terms and statements — and only after receiving appropriate notice of any new terms, under applicable data protection laws," stated Andy Kill.
Privacy Concerns and Data Protection
Privacy advocates are still concerned. They have raised the alarm about the privacy implications of selling this massive trove of highly sensitive genetic data, even with these government assurances. Signal’s president Meredith Whittaker recently made this alarming prediction. In her statement, Blumenthal specifically called out the worrisome aspects of 23andMe’s data usage and sharing.
"It’s not just you. If anyone in your family gave their DNA to [23andMe], for all of your sakes, close your/their account now," remarked Meredith Whittaker.
23andMe takes great pride in pushing back on U.S. law enforcement requests for customer genetic data. They keep a public facing transparency report that shows their collaboration with law enforcement. This view has helped to make the company a private customer privacy defender against public corporate prosecution towers.
Yet as the company continues with its point of no return restructuring and cherry-picking asset sales, management of customer data is probably the biggest ongoing question mark. Now, the firm has announced its intention to commercialize its genetic database. This decision reinforces the pressing need for robust privacy protection and transparency to consumers.
Leave a Reply