Legal Battle Over 23andMe Data Sale Erupts
A significant legal challenge has emerged as 27 states, along with the District of Columbia, have filed a lawsuit in bankruptcy court to prevent the sale of personal genetic data by 23andMe without explicit customer consent. The states argue that the sensitive nature of biological samples, DNA data, health-related traits, and medical records necessitates informed consent from each individual before any transfer or sale to another entity. This action comes amid 23andMe's bankruptcy proceedings, which began earlier this year after the company filed for Chapter 11 protection on March 23.
The lawsuit highlights growing concerns over consumer privacy, especially following a major data breach in 2023 that further eroded public trust in the genetic testing company. With over 15 million customers, the potential sale of such a vast repository of genetic information has sparked alarm among state officials who fear the misuse of this data by third parties. Oregon's Attorney General has been vocal in emphasizing that genetic data is uniquely personal and should not be treated as a mere asset in bankruptcy proceedings.
Bankruptcy and Bidding Wars Intensify Privacy Debate
23andMe's financial struggles have been well-documented, with the company facing declining demand for its ancestry testing kits and reputational damage from the aforementioned data breach. After filing for bankruptcy, the company announced plans to facilitate a sale, drawing interest from various parties. A recent development saw a new auction for the company's DNA data with an opening bid of $305 million from a group led by former CEO Anne Wojcicki, following an earlier $256 million offer from Regeneron.
This bidding war has intensified the debate over the ethical implications of selling genetic data. State attorneys general argue that without strict consent protocols, customers could lose control over their most intimate information. The states' legal filing underscores the risk of this data being exploited for purposes ranging from targeted marketing to more nefarious uses, prompting urgent calls for protective measures during the bankruptcy process.
Customer Concerns and Future Implications
As news of the lawsuit spreads, many of 23andMe's 15 million customers are left questioning the security of their genetic information. The company has also faced scrutiny over a $30 million settlement related to the 2023 data breach, with claims now open for affected individuals to receive compensation of up to $10,000. This settlement, however, does little to address the broader issue of data ownership and consent now at the forefront of the multi-state legal action.
The outcome of this lawsuit could set a significant precedent for how personal data is handled in corporate bankruptcies, particularly for companies dealing with sensitive health and genetic information. If successful, the states' efforts may lead to stricter regulations ensuring that individuals retain control over their data, even in the face of corporate restructuring. As the bankruptcy court deliberates, the balance between corporate interests and consumer privacy hangs in a delicate balance.