New 23andMe Buyer Does Little to Quell State Objections to Genetic Data Sale
Objections to the proposed sale of genetic data in the 23andMe bankruptcy case continued piling up in court this week. They came from a range of affected parties, including states and customers of the biotechnology company.
Sign up for a free preview to unlock the rest of this article
Privacy Daily provides accurate coverage of newsworthy developments in data protection legislation, regulation, litigation, and enforcement for privacy professionals responsible for ensuring effective organizational data privacy compliance.
Led by 23andMe's co-founder and former CEO Anne Wojcicki, the TTAM Research Institute, which she heads, agreed late last week to acquire the company and nearly all its assets for $305 million. 23andMe declared bankruptcy in March.
Days after the announcement, Texas filed a supplemental objection to the sale. Among other things, Texas argued Tuesday that selling customers' sensitive data violates state law. Texas previously objected in a June 10 court filing, following a joint objection from a bipartisan coalition of 28 states the day before (see 2506100051).
Tennessee also filed a supplemental objection Tuesday after TTAM was announced as the winning bidder for 23andMe. "Tennessee maintains that while it does not oppose a sale in principle, it still opposes the transfer of consumers’ genetic data without their separate express consent," the state said.
The state argued that customers must provide "separate express consent" since TTAM is "a different entity that would control the genetic information than the one which consumers contracted with initially, even if some of the new business personnel and operation will be familiar to current consumers."
California also filed a supplemental objection to the final proposed sale Monday, firing back against the idea that 23andMe can bypass state laws such as the Genetic Information Privacy Act (GIPA). The state filed its original objection on June 9, which Alaska joined on June 11 (see 2506110047).
23andMe "fear[s] that compliance with GIPA would be too costly because too many Californians -- if given their statutory rights -- would decline to affirmatively consent to the sale of their genetic data," reducing the value of the company, the state said. As such, the company prefers the approach "that state-law transfer restrictions, like GIPA, somehow do not apply. [The company is] ... wrong.”
E. Eichele, described in court documents as an “unwilling” 23andMe customer, sought a temporary restraining order (TRO) Monday to prevent the final sale of customer's genetic data. The TRO should remain until “such time as 23andMe removes any and all obstacles ... preventing 23andMe's customers from deleting their accounts prior to the sale,” Eichele said in the court document: That would allow “customers to make an informed decision regarding deleting their accounts prior to the sale.”
Another customer, Sonia Herb of New York, said she didn't consent to the sale of her genetic data. “I am particularly concerned about the potential misuse of genetic and health data, and I request that the Court take all necessary steps to prevent the transfer of my information to any acquiring party,” she said in an objection Monday. “I believe such a transfer would violate the spirit, if not the letter, of 23andMe's original privacy policy under which my data was collected.”
However, TTAM Research's filing supported the 23andMe deal as the “value-maximizing result” of the bankruptcy case. “It is anticipated to satisfy all of the Debtors’ creditors in full and generate meaningful distributions to stockholders,” TTAM's reply said.
“TTAM’s winning bid is not only the highest and best offer in terms of economic value but also for its commitments to consumer protection and privacy,” the nonprofit continued, outlining that it will honor in perpetuity 23andMe’s policies on deletion and research opt-out.
Additionally, TTAM said customers will receive emails containing details on the company's privacy adherence and other policies. In addition, it said genetic data won’t be sold in any subsequent bankruptcy without the adoption of TTAM’s privacy policies and a Consumer Privacy Advisory Board will be established.
23andMe also filed a reply supporting the sale. A hearing is scheduled for 9 a.m. CT on Wednesday before Judge Brian Walsh in the U.S. Bankruptcy Court for Eastern Missouri.
The biotechnology company has been under fire over concerns about privacy violations and the fate of its genetic data from a potential sale to a third party (see 2503240046). In a 211-page report by a court-appointed consumer privacy ombudsman, recommendations included separate, affirmative consent from consumers for the transfer of their genetic data before a sale of the company occurs, which many state and federal officials agree would be the best way to ensure consumer trust (see 2506120080).
The sale to Wojcicki and TTAM is expected to close in the coming weeks (see 2506160045).