23andMe settles, not fights. And their independent directors just quit. The troubled (understatement) company is paying $30 million to settle a massive class action lawsuit around the 6.9 million data breach that started a year ago. This infamous data breach that TTA timelined here was discovered last October, with 23andMe claiming it only affected 14,000 records. Reality dawned as it rapidly grew to millions through the 23andMe databases of over 14 million. By December, 23andMe then resorted to blaming users reusing previously breached passwords (credential stuffing) which was easily disproved. It was one of the worst corporate faux pas since Bud Light.
The hackers had also specifically targeted people with Chinese or Ashkenazi Jewish heritage which wasn’t disclosed until February, though part of the October 2023 hack. It added to the suspicion that those of Jewish heritage were specifically targeted.
Users as a group will receive $30 million along with three years of credit monitoring called Privacy & Medical Shield + Genetic Monitoring. The settlement reached 13 September requires approval by the Federal District Court in the Northern District of California, San Francisco division.
Notably, 23andMe spokesperson Katie Watson confirmed to The Verge that $25 million will be covered by cyber insurance, so most of the cash is there. The settlement document also refers to the extremely uncertain financial condition of the company and asks that the judge halt any further arbitrations by tens of thousands of other class members. 23andMe’s parlous financial status is publicly well known, but no other buyer since the board’s turndown in August of Anne Wojcicki’s offer of $0.40 per share has stepped up to make an acceptable offer. (Perhaps the board was premature–it closed today at $0.34.) Reuters
Breaking: Wojcicki won’t have to worry about her independent directors anymore. They’ve resigned, effective today, leaving a board of one. The seven directors sent a letter today (Tuesday 17 September) to CEO Wojicki citing that the Special Committee of the board, after months of work, never received from Wojcicki a “fully financed, fully diligenced, actionable proposal that is in the best interests of the non-affiliated shareholders”. It was quite an ask, given that Wojcicki controls the company through a supervoting arrangement. She reportedly holds 22.5% of the company’s outstanding Class A common stock and 59.2% of outstanding Class B common stock (according to analyst TD Cowen)–other reports state that she has in total 49.99% of the voting power. In their letter, they made it clear that the differences were irreconcilable: “Because of that difference and because of your concentrated voting power, we believe that it is in the best interests of the Company’s shareholders that we resign from the Board rather than have a protracted and distracting difference of view with you as to the direction of the Company.” Your move, Anne. Release
(An examination of the board posted online reveals that only one of the resigning members, Richard H. Scheller, ever worked at 23andMe. According to his online bio, he joined 23andMe in 2015 as Chief Scientific Officer and Head of Therapeutics. According to his Caltech board of trustees bio, he retired from 23andMe in 2019.)
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