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23andMe has filed for bankruptcy and is seeking a buyer after a major data breach.
The company rejected a takeover bid from co-founder Anne Wojcicki, who resigned as CEO.
California’s Attorney General advised customers to delete their data amid privacy concerns.
Pioneering US genetic testing company 23andMe has filed for bankruptcy and is looking for a buyer two years after hackers gained access to millions of profiles.
23andMe, which sells a mail-back saliva test to determine ancestry or certain health-related genetic traits for lessthan $350, said late on Sunday that it had “filed a voluntary petition for reorganisation” with a state bankruptcy court in Missouri.
The announcement prompted warnings for 23andMe customers to ask the company to delete their data amid privacy fears.
At its height a few years ago, the DNA testing craze saw millions of consumers rushing to discover their ancestry and health information with tests from 23andMe becoming popular holiday gifts.
The Silicon Valley-based company, which went public in 2021, claims 15 million customers and has seen its sales decline in recent months as the testing craze faded and the company suffered a data breach.
23andMe said that it rejected a takeover offer from its co-founder and CEO Anne Wojcicki, who has resigned from her position but will remain on the company’s board of directors, according to the statement.
On X, Wojcicki posted that “While I am disappointed that we have come to this conclusion and my bid was rejected, I am supportive of the company and I intend to be a bidder”.
She explained that her resignation as CEO was strategic so as to “be in the best position to pursue the company as an independent bidder”.
Wojcicki, who co-founded 23andMe 19 years ago, acknowledged the company’s challenges but emphasised her “unwavering” belief in its future.
The DNA testing craze saw millions send their saliva off for testing. Photo / 123RF
Faced with the difficulties, 23andMe announced the dismissal of 40% of its staff, about 200 people, in November.
It also suspended its research programmes. In a regulatory filing, 23andMe also said that it has agreed to pay approximately $65 million to settle claims related to the 2023 data breach.
The 2023 hacking incident saw 6.9 million accounts affected, of which 5.5 million contained information on genetic matches.
Using customers' old passwords, the hackers compromised data that included names, sex, birth year, location, photos, health information, and genetic ancestry results.
‘Time to delete’
With the bankruptcy announcement, California Attorney-General Rob Bonta advised customers who have submitted their DNA to delete their genetic information from the website.
“Given 23andMe’s reported financial distress, I remind Californians to consider invoking their rights and directing 23andMe to delete their data and destroy any samples of genetic material held by the company.”
There are few data privacy safeguards in the United States at a national level, but California has its own laws regulating the handling of user data.
Geoffrey Fowler, a tech columnist for the Washington Post warned: “If you’re one of the 15 million people who shared your DNA with 23andMe, it’s time to delete your data.”
He cited the risk “that your data could get sold or transferred to a new company, which might want to use it for new purposes”.
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