A broad coalition of states and the District of Columbia has initiated legal action in bankruptcy court, seeking to prevent the sale of sensitive personal genetic information held by 23andMe without explicit customer consent. This lawsuit emerges as a major biotechnology company aims to acquire the financially troubled firm, bringing to the forefront critical questions about data privacy and the control individuals have over their most intimate biological details.
23andMe’s Business Model and Recent Struggles
Known for its saliva-based DNA testing kits, 23andMe enabled customers to explore their ancestry and connect with relatives. Since its founding in 2006, the company also ventured into health research and drug development. However, it faced significant challenges in establishing a profitable business model following its public listing in 2021. This culminated in substantial layoffs affecting 40% of its workforce in March and a filing for Chapter 11 bankruptcy protection in the Eastern District of Missouri, actions that subsequently intensified concerns regarding the security of its vast customer data.
The Proposed Acquisition and Data Protection Pledges
Regeneron Pharmaceuticals recently announced its intent to acquire 23andMe for $256 million. In response to mounting privacy concerns, Regeneron stated its commitment to fully adhere to 23andMe’s existing privacy policies and all applicable laws. The company further assured that all customer personal data would be processed strictly in accordance with current consents, privacy policies, terms of service, and notices, while also maintaining robust security controls designed to safeguard such information.
Ensuring Consumer Data Privacy
Amidst the legal proceedings, an independent consumer privacy ombudsman, appointed by the court, is tasked with thoroughly examining the proposed sale. This crucial role involves evaluating how the acquisition might affect consumer privacy and providing a detailed report to the court. This oversight aims to ensure that the highly sensitive nature of genetic data is respected and that customer consent remains paramount, preventing its treatment as mere property during bankruptcy proceedings.
Jonathan Reed received his MA in Journalism from Columbia University and has reported on corporate governance and leadership for major business magazines. His coverage focuses on executive decision-making, startup innovation, and the evolving role of technology in driving business growth.