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23andMe Files for Chapter 11: What’s Next for Your Data?


23andMe went far for itself by marketing home, mail-in DNA screening packages that provided common individuals a consider their feasible origins along with hereditary pens that can indicate possible clinical issues in the future.

People purchased right into the concept and purchased the packages. The firm made a great deal of cash, and its worth got to as high as $6 billion when it went public in 2021. But ultimately require discolored therefore did 23andMe’s revenues. Its worth had actually gone down to concerning $50 million recently. The firm likewise endured a enormous information violation in 2023, contributing to its installing expenses and ruining rely on its information safety methods. Late in 2014, it stated it would certainly dismiss 40% of its labor force.

So it had not been a huge shock that after the failing of a desperate proposal by the chief executive officer to take the firm personal, 23andMe eventually declared Chapter 11 personal bankruptcy security in late March, stating it really hopes the action will certainly assist it shed more costs and bring about the sale of the company

Now the opportunity of a sale overseen by an insolvency court has information personal privacy professionals stressed. From an economic perspective, 23andMe’s collection of countless hereditary examples and records is conveniently its greatest possession. But for the firm’s clients, it’s a few of their most personal and individual details.

In announcing the bankruptcy filing, Mark Jensen, chair of the unique board of 23andMe’s board of supervisors, stated the firm “remains committed to continuing to safeguard customer data and being transparent about the management of user data going forward.”

He included that “data privacy will be an important consideration in any potential transaction.”

But it’s uncertain just how much control 23andMe will certainly have more than that, if any individual, gets the firm and what they select to do with its treasure of customer information. In a Chapter 11 sale, it’s the court looking after the situation, and not the firm itself, that has the last word over that the customer is.

“The problem we’re having at this exact moment is that we have more questions than answers, Aaron Rose, a security architect with Check Point Software, said Monday.

Rose noted that while consumers seemed to shrug off the company’s 2023 data breach, which resulted in the compromise of the personal information of about half the company’s 14 million users at that time, the filling appears to have been a needed wake-up call.

“People really did not take [the breach] that seriously,” Rose said. “Now we have a scenario where we do not recognize that is mosting likely to think possession of this information.”

Worries about data security

The thought of unknown ownership has many consumers justifiably nervous, Rose said. And it has some data privacy experts advising them to delete their 23andMe accounts and request that their samples and other data be destroyed.

Ryan Sulkin, a partner at the law firm Benesch and leader of its data protection practice group, said that in a lot of ways the case is unprecedented. Though hospitals and health insurance companies have been through the Chapter 11 process, 23andMe’s case could be a first, considering the massive amounts of biometric and genetic data involved. 

In general, Sulkin said, when companies are sold, peoples’ data remains protected by the privacy policy in place when that data was collected.

But at the same time, there’s no comprehensive federal privacy law in place in the US that would protect the 23andMe data. Laws like the Health Insurance Portability and Accountability Act, or HIPAA, don’t apply in this case, he said, because though 23andMe’s data may seem medically oriented, it isn’t health care data as defined by that law.

Users who live in one of the about 20 states that have passed their own data privacy laws may have some protections, Sulkin said. And he correctly predicted that the Federal Trade Commission could take an interest in the case and make it known that it wants consumers’ data protected.

FTC Chairman Andrew Ferguson on Monday issued a letter to the U.S. Trustee, saying that many Americans are concerned about the potential effects of the bankruptcy case on the privacy of their data. He said the FTC believes that consistent with federal bankruptcy law, the company must keep the promises spelled out in its current data privacy policy. 

But ultimately, the fate of the company’s consumer data will be determined by the bankruptcy court, which Sulkin said will likely appoint an ombudsperson who’ll be, at least in theory, accountable for protecting the privacy rights of consumers.

“But regardless of what, there will certainly be a stress in between the personal bankruptcy court’s goal to shield as much worth as feasible within the firm and at the very same time regard the personal privacy legal rights of people,” he said.

One thing to keep an eye on, Sulkin said, are the potential 23andMe buyers, especially if they’re based, or at least partially based, outside the US. He pointed to the ongoing controversy over TikTok, which lawmakers voted to ban last year over concerns about its data collection practices and ties to China.

The judge could choose to reject a bid from a foreign company because of similar concerns, Sulkin said.
And 23andMe notes that any potential sale would also be subject to approval by federal regulators and have to comply with US antitrust regulations and laws governing foreign investment in US companies. 

Time to delete?

Given the uncertainty that continues to swirl around the future of 23andMe, people worried about the privacy and security of their data might want to delete their accounts and request that their data be destroyed sooner rather than later.

That’s what Darren Williams, founder and CEO of cybersecurity company BlackFog, chose to do. He also made sure his family members did the same.

Though it’s likely 23andMe’s data-sharing practices won’t change anytime soon, there’s always a possibility that its consumer data could end up in the wrong hands, whether that be through another data breach or a sale to a company that isn’t as careful as it should be with consumer data.

“Unfortunately, we stay in a globe currently where information exfiltration is the standard, not the exemption,” Williams said. “And when that information has actually headed out onto the dark internet and has really been taken, there’s no other way to obtain that information back.”  

It remains unclear what cybercriminals could do with that data if they got their hands on it, he said. Experts have long fretted about what could happen if data related to health care were stolen in a breach, but most online criminals remain financially motivated and, for the most part, have yet to find a way to make money off medical information.

At the very least, the more information attackers have about any given person, the bigger profile they can build of them, Williams said, putting them at risk of socially engineered phishing and other online attacks.

While those worries are valid, Rose said it’s up to the individual user to weigh the risks versus the rewards and then decide if they want to delete their account. Rose, also a longtime 23andMe user, said he’s in the process of doing that himself right now.

Regardless of how 23andMe’s case plays out, Rose said he hopes it makes people a little bit more aware of how much of their personal data is out there, and prompts them to think twice before handing data over to companies.

In Sulkin’s view, 23andMe users who are worried about security and privacy are best off deleting and destroying as soon as possible, just given the uncertainty surrounding the case. But he also hopes people will be more cautious with their personal information. 

“Just since they’re giving their details to firm A today does not indicate that firm A will certainly look the very same a year from currently, or 2 years from currently or 3 years from currently,” Sulkin said. “And they require to be conscious of that.”





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