23andMe’s future in question amid data breach and loss of customer trust

The news: 23andMe’s fall from grace continues, and the future is opaque for its stockpile of health data.

• The biotech company laid off about 40% of its staff last month after its entire independent board resigned in September.
• Amid declining revenues and fallout from a massive data breach, many users are trying to delete their 23andMe data.

The decline: Although 23andMe once stood as a darling of the biotech market, it has struggled to develop a sustainable business model and may have exhausted its customer base.

• 23andMe’s DNA test kits are a one-time purchase, but the company offers a $69 annual subscription for wellness tips and health planning.
• Its paid subscriber base dropped to 562,000 in Q4, down 640,000 YoY.
• Sales of its kits in Q4, which accounted for 84% of 23andMe’s revenue, declined $6.9 million YoY.

Too little, too late? In August, 23andMe’s board rejected a pitch from CEO and co-founder Anne Wojcicki to take 23andMe private by purchasing all outstanding shares. Wojcicki isn’t considering selling the company, leaving the company at an impasse unless it turns around quickly.

• The company’s brand is at risk after its data breach exposed personal information of about 7 million customers and resulted in a $30 million class-action lawsuit.
• 23andMe is also facing competition from companies like Ancestry and low-cost health planning apps.

Where will the data go? More than 80% of its customers opt in to share their genetic data for medical research with companies including Pfizer and GSK, and the company hasn’t clarified where that information will go if 23andMe goes under.

• That data is anonymized and can’t be reidentified, meaning any shared genetic data can’t be taken back or removed from research projects.
• Data that wasn’t shared for medical research can be deleted from 23andMe’s systems upon request.

Our take: Potential new users could be dissuaded from trying 23andMe’s services without a firm idea of what will happen to their information if the company fails.

Coupled with regulators’ increasing scrutiny over data privacy, the company’s remaining subscriber base could jump ship, leaving 23andMe unable to recover if it doesn’t determine further monetization strategies.

This article is part of EMARKETER’s client-only subscription Briefings—daily newsletters authored by industry analysts who are experts in marketing, advertising, media, and tech trends. To help you finish 2024 strong, and start 2025 off on the right foot, articles like this one—delivering the latest news and insights—are completely free through January 31, 2025. If you want to learn how to get insights like these delivered to your inbox every day, and get access to our data-driven forecasts, reports, and industry benchmarks, schedule a demo with our sales team.