23andMe Agrees to Back a Privacy Advocate for Customer DNA Data

(Bloomberg) -- Bankrupt DNA testing firm 23andMe agreed to support a court-approved data privacy ombudsman who would review the sale of customer’s genetic data as part of the company’s bankruptcy.

The decision is a victory for federal and state officials, who argued customers would be better protected by a privacy advocate appointed instead of the “data representative” that 23andMe had offered to hire. US Bankruptcy Judge Brian Walsh authorized the advocate, whose primary job will be to file a report on whether a sale of genetic data complies with federal law and is in the interest of customers.

23andMe filed for bankruptcy in March after failing to generate sustainable profits by providing medical and ancestry-related genetic testing to more than 15 million customers. About 550,000 people pay for the company’s two primary services, which hasn’t been enough to keep the company afloat.

Saliva samples in the company’s biobank — and the genetic data they yielded — have become the bankrupt company’s most marketable asset. But the prospect of the sensitive information being put up for auction has sparked anxieties among customers worried about how and where of their personal data may be used. Bankruptcy officials have also raised concerns.

The former Silicon Valley startup co-founded by Anne Wojcicki has been negotiating with potential buyers trying to land a binding, opening offer that would be used as a floor for a court-supervised auction. 

In the months leading up to the March 23 bankruptcy filing, the company had tried to attract a buyer. At the same time, it was struggling to end a class action lawsuit related to a 2023 data breach that gave hackers access to customer information. The company will try to resolve those claims as part of the bankruptcy.

The privacy advocate will also examine the company’s cyber-security systems and the how any potential buyer would protect customer data in the future.

The case is 23andMe Holding Co., number 25-40976, in the US Bankruptcy Court for the Eastern District of Missouri.

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