McDonald’s sued for allegedly using AI tool to determine pricing for franchises

PUBLISHER ARTICLE PREVIEW

From the original article

Suit says AI tool allows independently owned franchises to exchange nonpublic price and sales information

McDonald’s is facing a lawsuit in federal court over its alleged use of an AI tool to determine pricing across independent franchises, which prosecutors say violates antitrust laws and has unfairly inflated menu prices for Americans.

The vast majority of McDonald’s US stores are independently owned and are said to individually decide on prices under company policy. Antitrust laws require businesses to set prices independently from their competitors, as coordinating prices can stifle market competition and push up costs for consumers.

The lawsuit, filed on 2 October in a federal Chicago courtroom, alleges that McDonald’s AI tool is illegal because it amounts to independent franchise locations exchanging nonpublic price and sales data.

“This case is about McDonald’s bringing ‘optimization’ to America’s largest fast food chain,” the complaint says. “McDonald’s has built and for years deployed its own information-sharing pricing platform, which draws on data from its millions of daily transactions to set menu prices across thousands of US restaurants. The result is algorithmic price-fixing aimed at customers who are already stretched thin.”

In response to the lawsuit, a spokesperson for the McDonald’s corporation said that the “complaint is filled with inaccuracies and we will vigorously defend against this lawsuit”.