(Bloomberg) – Bankrupt DNA testing company 23andMe agrees to support a court-approved data privacy ombudsman who will review the sale of customer genetic data in a portion of the company’s bankruptcy.
The decision is a victory for federal and state officials who believe clients will be protected by appointed privacy advocates rather than the “data representatives” that 23andme proposes to hire. U.S. bankruptcy judge Brian Walsh authorized the advocate whose main job will be reports on whether the sale of genetic data is in compliance with federal law and in the interests of clients.
23AndMe filed for bankruptcy in March, failing to create sustainable profits by providing medical and ancestral-related genetic testing to more than 15 million customers. About 550,000 people paid for the company’s two main services, which wasn’t enough to make the company float.
The saliva samples in the company’s biobank – and the genetic data they generate – have become the most marketable asset for bankrupt companies. However, the prospect of sensitive information to be auctioned raises anxiety about customers about how and where to use their personal data. Bankruptcy officials have also attracted people’s attention.
The former Silicon Valley startup co-founded by Anne Wojcicki has been negotiating with potential buyers in an attempt to gain binding, open offer to be used as floor for a court-supervised auction.
In the months leading up to the bankruptcy filing on March 23, the company tried to attract buyers. Meanwhile, it is working to end a class action lawsuit related to the 2023 data breach that has given hackers access to customer information. The company will try to resolve these claims as part of the bankruptcy.
Privacy advocates will also examine the company’s cybersecurity system and how any potential buyer can protect customer data in the future.
The case is 25-40976, U.S. Bankruptcy Court, 23andMe Holding Co., Ltd., in the eastern region of Missouri.
More stories like this are available Bloomberg.com
