McDonald’s AI Pricing System Faces Price-Fixing Lawsuit
A lawsuit claims McDonald’s uses AI to fix prices across its franchises, sparking legal and ethical debates.
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McDonald’s is facing a federal price-fixing lawsuit alleging its AI-powered pricing system manipulates menu prices across its U.S. franchises. An Illinois resident, Michael Thomas, filed the lawsuit in Chicago federal court, claiming the fast-food giant conspired with its franchise owners to set prices through an artificial intelligence tool, according to the complaint reported by Reuters.
AI Tool Allegedly Manipulates Menu Prices
The lawsuit alleges that McDonald’s uses a machine-learning pricing engine, trained on competing restaurants’ sales data, to determine how much customers will pay for products at each franchise. The complaint states that the AI system estimates how much each restaurant’s likely customers are willing to pay and uses nonpublic data from competing McDonald’s locations to adjust prices. It also claims the algorithm is programmed to tie one restaurant’s price increases to whether other McDonald’s restaurants have already raised prices on the same item.
“McDonald’s is leveraging its troves of data and its franchised system to nickel-and-dime consumers down to the last French fry,” Lark Turner, a lawyer representing the plaintiff, said in a statement to Reuters.
McDonald’s is using artificial intelligence to help set menu prices across the US and some global markets, a plan that aims to boost profit but risks alienating customers and attracting antitrust scrutiny. READ: https://t.co/9TQ0r55A5q https://t.co/TfmZH4VZ8p
McDonald’s rejects the claims, stating that AI does not set menu prices at its restaurants. “Franchisees make the best decisions for their businesses and customers,” the company said in a statement to the Daily Caller News Foundation. “Optional tools are available to help them, but these do not automate, coordinate, or fix pricing in any way.”
AI System Operated by Tiger Analytics
Tiger Analytics operates the AI system McDonald’s relies on, which mines the chain’s sales records to suggest what each of its nearly 14,000 U.S. restaurants should charge, Reuters reported. The discrepancy in Big Mac prices, as a result of the AI tool, was demonstrated by Reuters in a video posted Sept. 29 on X.
McDonald’s CEO Chris Kempczinski mentioned the AI tool on an Aug. 4 earnings call, stating that the company sometimes raises pricing with franchise owners who don’t follow its recommendations.
Source: Daily Caller
