23andMe genetic testing company bankruptcy raises questions about data privacy

The owner of “the world’s largest proprietary database of health and genetic information” has filed for bankruptcy, leaving consumers what will happen to their personal genetic data.

23andMe, a testing service for people to learn more about their genetic heritage and health, filed for Chapter 11 bankruptcy on March 23. The company announced it will use the voluntary, court-supervised process “to maximize stakeholder value” through a sale.

“Any buyer will be required to comply with applicable law with respect to treatment of customer data,” the company’s bankruptcy news release said. Even so, the company’s circumstances have prompted questions about consumer protections.

“Your data remains protected,” said a March 23 “Open Letter to 23andMe Customers.” The court case will not change how 23andMe stores, manages or protects customer data, and any buyer must comply with applicable laws about customer data, according to the company.

Uncovering genetic data

23andMe offers genetic testing that allows customers to “uncover your historical and ancient relatives,” according to its website. Apart from researching a family tree, 23andMe touts potential health benefits of genetic testing to discover potential medical risks.

“Which gene could save your life?” the company’s website said. It has published customer stories about genetic testing, and its genetic sequencing can detect at least 200 hereditary disease-causing variants, with screening for more than 55 clinically actionable and under-diagnosed conditions, according to the website.

23andMe allows customers to contribute data toward its research — no small endeavor, with 276 papers published since 2010 in journals including Nature and Science.

The ancestry service starts at $99 a year; for additional services, health plans start at $199, a 23andMe+ Premium service costs $199 with annual renewal at $69, and a 23andMe+ Total Health plan costs $499, with annual dues of $199, according to the company’s website on March 25.

Difficulties in the market

In the last two years, 23andMe has published notice of market troubles. This month, 23andMe landed in The New England Journal of Medicine (NEJM) in an analysis by Sara Gerke, Dipl.-Jur.Univ., Melissa Jacoby, JD, and I. Glenn Cohen, JD, who recounted those problems.

Since starting in 2006, 23andMe sold DNA kits to more than 14 million people. Their data “will most likely be sold to the highest bidder, a successor company that customers might not want to entrust with their genetic data,” the authors wrote.

The company had “a massive data breach in 2023,” the authors said. 23andMe publicly announced a $30 million class action settlement due to that cyber incident.

Last year 23andMe’s stock price plummeted 72%. In November 2024, the company announced a business restructuring that included job cuts for more than 200 workers, or approximately 40% of its workforce, in an effort to save more than $35 million a year.

“We are taking these difficult but necessary actions as we restructure 23andMe and focus on the long-term success of our core consumer business and research partnerships,” 23andMe CEO, Co-Founder and Board Chair Anne Wojcicki said in a statement at that time. “I want to thank our team for their hard work and dedication to our mission. We are fully committed to supporting the employees impacted by this transition.”

Exploring alternatives

In January, the company published quarterly results and announced it would explore strategic alternatives to stay afloat, up to a possible sale. The bankruptcy case followed.

“After a thorough evaluation of strategic alternatives, we have determined that a court-supervised sale process is the best path forward to maximize the value of the business,” said Mark Jensen, chair and member of the special committee of the board of directors. Jensen’s statement was included in the company’s bankruptcy news release of March 23.

“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 said. “We believe in the value of our people and our assets and hope that this process allows our mission of helping people access, understand and benefit from the human genome to live on for the benefit of customers and patients.”

Privacy problems

The case points to a larger issue in American law, “a structural problem in a legal system that relies heavily on privacy policies to protect consumer data, while also treating those data as a valuable asset,” the NEJM authors said.

People with a fear of needles need not worry — 23andMe touts its ability to distill genetic data when customers spit saliva into a tube, then ship it back. They are considered customers, not patients, so the federal Health Insurance Portability and Accountability Act (HIPAA) does not cover their data, the NEJM authors said.

In a Harvard Gazette interview, Cohen noted bankruptcy laws offer some consumer protections, “but they’re not perfect.”

American federal privacy law is behind those of developed nations of Europe, and probably won’t change in time to affect the bankruptcy case, he said.

Until then, let the buyer beware.

“One thing we want to highlight is that when most people have given their genetic information, they’ve never thought about this, and we just want people to pay attention to it,” Cohen said in the interview.

As for the court case, Kroll Restructuring Administration is working with the company for the relevant procedures. A hearing on the first day motions needed to begin proceedings was to be scheduled.