economie

The rise and fall of 23andMe

October 20, 20240
The FDA told 23andMe to stop marketing its genetic health screening service in 2013.

Andrew Harnik/AP Photo

23andMe found itself in trouble with the US Food and Drug Administration in 2013.

The FDA instructed 23andMe to stop marketing its genetic health screening service in the United States until it completed the agency’s regulatory review process. The company could continue selling its ancestry service.

23andMe complied with the FDA’s request, meaning it only provided users with Ancestry reports and raw data.

Wojcicki discussed the FDA’s regulation during an appearance at the SXSW festival in 2014.

“It has slowed up the number of people signing up,” Wojcicki said, according to The Guardian.

She added: “We are pioneers. We’ve had a lot of ups and downs but we have lots of tenacity to push on through. It will take time, money, and effort to figure out the path forward.”

The company met the FDA’s standard in 2015.

“The new 23andMe experience reflected almost two years of work with regulators, our scientists, medical experts, and product designers,” the company said. “The result is the first direct-to-consumer test available directly to individuals in the United States that includes reports that meet FDA requirements for being scientifically and clinically valid.”

2015: The FDA authorizes 23andMe to market the Bloom syndrome carrier status report
Wojcicki said the consumer DNA test kit industry faced a lull in 2019.

Emma McIntyre/Getty Images for MAKERS

The company had millions of users by 2019, showing significant growth since its launch.

But demand began to wane that year as the 23andMe business model — which relied on one-time tests — faltered.

Wojcicki echoed that sentiment in a comment to Business Insider, saying, “It’s a new technology, and I think it’s hit a lull.”

Wojcicki remained optimistic that the industry would bounce back, but 23andMe announced it was laying off 100 employees in January 2020 as sales were still down.

The CEO told CNBC at the time that factors like privacy could remain a sore point. Another reason could be consumers’ fear of an economic downturn, meaning the somewhat pricey test is less of a priority.

Despite the downturn, 23andMe continued to collect investments.

In December 2020, 23andMe raised almost $82.5 million in equity funding.

2021: 23andMe goes public and reaches a valuation of over $6 billion
Some 23andMe users’ accounts were compromised in October 2023.

Justin Sullivan/Getty Images

Concerns about privacy always plagued 23andMe, but those concerns grew after news broke last year that some user data had been compromised.

The data — including birth details and names — was sold on the dark web by hackers.

23andMe confirmed that ancestry data for nearly 7 million users were accessed that December. A data breach notification filing in January 2024 said it took 23andMe five months to realize the data had been accessed.

The incident led to a class action lawsuit, which 23andMe settled for $30 million in September, according to Reuters.

The company also said in SEC filings it laid off more employees in 2023, including that June when it reduced its workforce by 9%. 23andMe laid off another 71 employees in August 2023, according to filings.

2024: 23andMe’s board of independent directors resigns
Wojcicki said she would not consider “third-party takeover proposals.”

Steve Jennings/Getty Images for TechCrunch

The company’s reputation took another hit in September when an SEC filing said Wojcicki “would be open to considering third-party takeover proposals.”

Wojcicki walked back that consideration in a filing later that month.

“Based on subsequent developments, it has become even clearer to me that the best path forward for the Issuer is for me to take the company private,” she said.

“Accordingly, in order to update my prior statement and avoid any confusion in the market, I am no longer open to considering third-party takeover proposals for the Issuer.”

However, Wojcicki’s remarks about selling the company to a third-party issuer raised consumer concerns about what could happen to their data if a sale did take place.

The Atlantic reported that the sale of 23andMe could also mean the potential sale of user data. The director of cybersecurity at Electronic Frontier Foundation, a nonprofit focused on digital privacy, urged users to delete their data in a post that garnered 547,000 views.

A 23andMe spokesperson told BI that Wojcicki “has publicly shared she intends to take the company private, and is not open to considering third-party takeover proposals.”

The statement added: “Anne has demonstrated an unwavering commitment to the company’s mission and values, and to its customers, pledging to maintain 23andMe’s strong security and privacy policies, including following the intended completion of the acquisition she is pursuing.”