The busy business of home DNA facing its first major test, as consumer demand for the products is beginning to dim. The issue was surfaced by the announcement of the leading firm in the segment, Ancestry.com, which announced across-the-board layoffs earlier this week. The news of the firm's shrinking workforce was paired with a blog post from President and CEO Margo Georgiadis that affirmed the slowdown.
Despite the fact that the firm is still helping “millions of people learn more about themselves by connecting them to their past” via consumer genomics, she wrote, the last year-and-a-half has seen a change in the market.
“Over the last 18 months, we have seen a slowdown in consumer demand across the entire DNA category,” her statement said. “The DNA market is at an inflection point now that most early adopters have entered the category. Future growth will require a continued focus on building consumer trust and innovative new offerings that deliver even greater value to people.”
And while Ancestry is the latest major name in the field to experience difficulty with consumer demand, they are not alone. A few weeks ago, its main competitor in the field, 23andMe, announced layoffs of 14 percent of its staff – roughly 100 people – due to lower-than-expected sales. The firm’s CEO noted that it was not clear why consumer demand had slowed down, but did speculate that privacy protection could be at least part of the reason.
It’s a concern that other market players are beginning to share. And those concerns break down across a few lines. Some are concerned that the incredibly intimate data made available in a home genome test could be vulnerable to cybercriminals or other unauthorized third parties. Given that over four billion consumer records worldwide were hacked in the first half of 2019 alone, that isn’t an entirely unreasonable concern – particularly given that once data is hacked and on the dark web, there is no getting it back.
But it seems consumers are also somewhat concerned with non-illicit – but nonetheless surprising – uses of their data. In 2018, for example, the Golden State Killer was arrested after a distant relative shared their DNA profile in an online database, and police were able to use that data to track down the fugitive in a case that had been cold for several decades.
And while most people agree that using DNA to catch fugitive serial killers is an excellent use of the technology, the case also highlights the fact that when one uploads their DNA to the public databases offered by firms like 23andMe and Ancestry.com, they are not only revealing information about themselves, but about everyone who shares their DNA.
Francis deSouza, chief executive of Illumina, maker of DNA sequencing machines, observed that the chill in the market extends beyond simple home testing companies, and that consumers are taking a “cautious view” of the entire ancestry and health testing market.
Georgiadis addresses those concerns in her remarks, noting that privacy will continue to be the firm’s primary concern when collecting and storing consumer data.
“We’re equally committed to building a brand consumers trust, helping lead the industry with best-in-class data stewardship principles and a commitment to trust and transparency,” she wrote.
She further noted that the layoffs affecting 6 percent of the firm's workforce were not taken lightly, but are necessary to reorient Ancestry for its expansion into healthcare services under its Ancestry Health banner. Under that offering, the firm will later this year launch a new sequencing product to provide customers with detailed information about their potential health risks.
But will it re-ignite consumers’ interest in genomic testing and offer enough value to overcome privacy concerns? Time will tell.