2 weeks Ago By Ron Leuty
Citing "national security" concerns, the U.S. Justice Department said Thursday that any sale of genetic test maker 23andMe could be subject to federal review.
In U.S. Bankruptcy Court in St.
Louis, where 23andMe filed its Chapter 11 bankruptcy protection case last month, the Justice Department said courts have said national security concerns are relevant in determining the relevancy of bidders wanting to buy assets out of bankruptcy court. The government's argument isn't surprising. Last week, Sen.
Bill Cassidy, a Louisiana Republican and chair of the Senate health committee, pressed the Treasury Department and the interagency Committee on Foreign Investment in the United States, or CFIUS, to guarantee that 23andMe's data does not end up in the hands of China or other countries hostile to the United States. But the filing does come at a time of particularly heightened tensions, especially between the United States and China, as the Trump Administration undertakes a trade war that has thrown global markets into disarray. When appropriate, the Justice Department noted in its filing, transactions can be referred to the president to weigh whether to suspend or prohibit a deal.
Trump in 2020 used a recommendation from CFIUS to order that ByteDance, the China-based owner of the video-sharing app TikTok, divest its U.S. assets; in his second term, Trump has extended a deadline for ByteDance to sell off those assets.
Members of Congress last year tried to use national security concerns to blacklist five life sciences companies , including San Jose-based Complete Genomics, because of their ties to China and alleged access to individuals' DNA data. That legislation ultimately died. The 23andMe bankruptcy case is complex and heavily watched by many of the 15.
5 million people who sent their spit samples to the Sunnyvale-based company to determine potential health problems or ancestry based on their genetic data. With the bankruptcy filing last month , consumer privacy advocates pushed users of the service to delete their data from 23andMe's site. The case's acting court trustee and 23andMe differ over ways to protect that data in a court-overseen sale: The company wants to choose a "customer data representative" while the trustee wants the court to appoint an independent "consumer privacy ombudsman.
" The ombudsman would have broader duties, the trustee argued, that could be critical to protecting some consumers' data in a sale. Twenty-year-old 23andMe, cofounded and led until recently by Anne Wojcicki, fought through a breach of data nearly two years ago that resulted in a $30 million settlement. The company jumpstarted consumer demand to learn more about the genetic basis of health problems, but it also had to deal with stalling demand for its service and the fallout of a capital-intensive foray into drug development.
The CFIUS review would add another layer of complexity to the case. The committee undertakes a 45-day review to determine a tranaction's potential impact on U.S.
national security. It can complete the review, spotlight potential risks or extend the review another 45 days to look at the impact of a deal, then the president has 15 days to decide whether to suspend or block a transaction with a company in a specific country. Companies in "countries of concern" in the Justice Department-administered "data security program" under an executive order by President Donald Trump are China, Cuba, Iran, North Korea, Russia and Venezuela.
The Justice Department's data security program prevents U.S. businesses from selling access to human genomic data through commercial deals, including selling, licensing or other commercial deals as well as investment, employment and vendor agreements, the agency said in the filing.
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