DNA testing firm 23andMe files for bankruptcy as demand dries up
- Oscar Jones
- Mar 25
- 3 min read
In a dramatic downfall for a one-time Silicon Valley darling, consumer genetics testing company 23andMe filed for Chapter 11 bankruptcy protection on Sunday, March 24, 2025. The move comes after months of turmoil marked by plummeting stock value, dwindling demand for its DNA testing kits, and the severe reputational damage stemming from a major data breach in 2023. The bankruptcy raises significant questions about the future of the sensitive genetic data belonging to its millions of customers, prompting urgent warnings from privacy advocates and state officials.
Financial Collapse and Market Saturation
23andMe's journey from a high-flying innovator to bankruptcy court has been swift. The company went public via a special-purpose acquisition company (SPAC) led by billionaire Richard Branson in 2021, initially achieving a valuation of $3.5 billion, which later peaked near $6 billion. However, the initial boom in consumer interest for ancestry and health DNA testing kits appears to have significantly cooled. Analysts suggest the market may be nearing saturation, as many potential customers have already purchased kits, and the product offers limited repeat purchase value. Competitors like Blackstone-owned AncestryDNA have also faced this market reality.
Compounding the issue of waning demand, 23andMe's financial performance has been volatile. While sales often saw temporary boosts during holiday seasons, sustained growth proved elusive. The company's stock price cratered following the 2023 data breach, falling dramatically in the months leading up to the bankruptcy filing. Having secured $35 million in financing, 23andMe intends to continue operating during the bankruptcy process as it seeks a buyer. The company listed assets and estimated liabilities between $100 million and $500 million.
The Devastating 2023 Data Breach
A critical blow to 23andMe's viability was the massive data breach disclosed in 2023. Hackers gained access to the personal information, and in some cases genetic ancestry data, of nearly 7 million customer profiles over several months. This incident severely damaged consumer trust and raised widespread alarm about the security and handling of highly sensitive genetic information by commercial entities. The breach resulted in a class-action lawsuit, which 23andMe eventually settled late last year for $30 million, further straining its finances. The company has since laid off employees and halted therapy development programs in a significant overhaul effort.
Urgent Concerns Over Genetic Data Privacy
The bankruptcy filing intensifies focus on the fate of the vast trove of genetic data 23andMe possesses. While the company stated it remains "committed to continuing to safeguard customer data" and that privacy will be an "important consideration in any potential transaction," experts and officials are sounding the alarm. Unlike typical medical data, consumer genetic information held by companies like 23andMe is often not protected by HIPAA laws.
California Attorney General Rob Bonta issued an urgent consumer alert advising 23andMe customers to "consider requesting 23andMe delete their data, revoke access for future testing, and request that their genetic samples be destroyed." Similarly, outlets like The New York Times' Wirecutter, which previously reviewed DNA kits, updated their advice, strongly recommending customers take action to protect their genetic data amidst the company's uncertain future.
The Electronic Frontier Foundation (EFF) and other privacy advocates emphasize that genetic data is immutable and uniquely revealing, not just about the individual, but also about their family members. Even if someone never used 23andMe, data from relatives submitted to the platform could reveal information about them. There's also precedent for law enforcement accessing genetic databases (though 23andMe states it requires a warrant). The concern is that a potential buyer might have different, less protective policies regarding data use, sharing, or security.
Leadership Changes and Future Uncertainty
Co-founder and CEO Anne Wojcicki, who had previously made multiple unsuccessful bids to take the company private, resigned concurrent with the bankruptcy announcement. Chief Financial Officer Joe Selsavage will serve as interim CEO. Wojcicki stated on social media her intention to make another bid for the company, though details remain sparse. Her last reported offer valued the company significantly lower than its peak.
While 23andMe facilitated meaningful discoveries for many users regarding ancestry and health risks, its current predicament underscores the risks associated with entrusting deeply personal genetic information to commercial entities, particularly when faced with financial instability and inadequate data security. The coming weeks and months will be critical in determining who might acquire 23andMe and what binding commitments, if any, will be made to protect the genetic privacy of its roughly 15 million customers. In the interim, the advice from privacy experts is clear: users concerned about their data should strongly consider deletion.
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