There's only one reason why Google (GOOG) invested $3.2 million in 23andMe, a personal genetic testing company: Founder Anne Wojcicki is married to Google founder Sergey Brin. Why else would a company known for its strategic smarts be throwing money at a company with a history of screwups?
Google previously invested $6.5 million in the company and Brin personally has plunked down $3.4 million. The company purports to offer genetic diagnostics for diseases such as breast cancer and restless legs syndrome from samples of customers' saliva. Here's what some of that money is being spent on:
- In May 2010, Walgreens refused to sell such tests after the FDA expressed concern.
- On June 10, 2010, the FDA wrote to 23andMe to inform the company that it was illegally marketing a medical device and it should apply for FDA approval. 23andMe said it "responded" to the letter but no details were given.
- Also in June, the company accidentally mixed up 96 tests and customers got the wrong data.
- In July, 23andMe was the subject of a damning investigation by the General Accountability Office, the non-partisan investigative arm of Congress, which showed that the various personal genetic testing companies gave wildly different results from the same customers. (Listen to the hilarious undercover tapes made by the GAO's investigators here.):
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- 23andMe admitted it was "Company 1" in the GAO report. That company's data in based largely on European DNA, not African or Asian DNA, and therefore its risk results are useless for non-whites. The company did not give the GAO's mystery shopper his/her money back.
If the FDA changes its mind about that exemption, and things go badly for 23andMe, I'm sure the company will know where to turn for a bailout.