US officials question 23andMe’s ability to navigate data protection during bankruptcy

Genetic testing company 23andMe’s bankruptcy has unsettled users and officials, raising crucial concerns about what will happen to the sensitive biometric data collected by the company.

23andMe filed for bankruptcy in March, following declining sales in its genetic testing kits and a large-scale data breach in 2023 that compromised the personal data of 6.9 million users. The company gave users the option to delete their data and claimed it would ensure any company that acquired 23andMe would adopt its privacy policy.

Despite recently announcing biotech company Regeneron would purchase 23andMe, the company pulled back its bid after 23andMe co-founder and former CEO Anne Wojcicki’s nonprofit TTAM Research Institute offered USD305 million.

Although 23andMe says consumers own their data, Cole Schotz P.C. Partner Luis Salazar said, if the terms are included in the organization’s privacy policies, “companies still have the legal right to use it and to even sell it under the right conditions. That doesn’t deny that they, the consumers, may still have some kind of ownership interest or right to it.”

Genetic data is particularly vulnerable due to its sensitive and identifiable nature. This data is also essential for direct-to-consumer DNA testing companies when selling their assets.

Salazar noted providing consumers with the ability to opt in to sharing their data would significantly lower the value of the company during bankruptcy proceedings. “The data is critical to the value and everyone else involved, from employees to lenders, investors and even consumers,” Salazar said. “It’s the fundamental basis of what you are basically saying is everyone’s expectation, ‘let’s just erase that, and have people opt in.’ That is going to diminish the value of the fundamental asset of this company, to the detriment of a lot of people.”

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