23andMe Loses 15% Customers After Bankruptcy Filing

23andMe, a prominent American genetic technology company, has disclosed that approximately 1.9 million customers, representing about 15% of its total customer base, have requested the deletion of their genetic data from the company's servers since it filed for bankruptcy protection in March. This revelation was made by the company's temporary CEO, Joseph Selsavage, during a hearing at the House Oversight Committee. The hearing focused on the company's sale process following its bankruptcy auction, which has raised significant public concerns about the potential misuse of genetic data from millions of Americans who use 23andMe's services.

The bankruptcy filing has sparked worries that the genetic data of millions of users could fall into the wrong hands, leading many customers to demand the removal of their data. The pharmaceutical giant Regeneron won a court-approved auction in May, acquiring 23andMe and its extensive customer DNA and genetic database for 2.56 billion dollars. Regeneron has stated that it will use 23andMe's data to aid in the development of new drugs and has pledged to maintain the company's privacy protections. The federal bankruptcy court is expected to review Regeneron's acquisition offer for 23andMe in late June.

Prior to its bankruptcy filing, 23andMe experienced a prolonged data breach that lasted for several months, resulting in the exposure of sensitive personal and genetic data from 6.9 million customers. The company attributed the data breach to customers not using multi-factor authentication, rather than acknowledging any failure on its part to secure customer accounts. Notably, the company did not mention that it took several months to detect the breach.

On the same day as the hearing, more than twenty states, including Florida, New York, and Pennsylvania, filed lawsuits against 23andMe, questioning the company's sale of customer privacy data. The states argue that 23andMe does not have the right to sell this data without the explicit consent of its 15 million customers. This legal action underscores the growing concern over data privacy and the ethical implications of selling genetic information.

The situation highlights the delicate balance between the potential benefits of genetic data for medical research and the need to protect individual privacy. As the legal and regulatory landscape continues to evolve, companies like 23andMe will face increasing scrutiny over their data handling practices. The outcome of the lawsuits and the federal bankruptcy court's review of Regeneron's acquisition offer will be closely watched by industry stakeholders and consumers alike.