Is AI deciding what you pay at McDonald’s? New US lawsuit raises antitrust questions

McDonald’s is facing a proposed US class-action lawsuit alleging its AI-powered pricing system helped coordinate menu prices across franchise restaurants. The lawsuit claims McDonald’s used nonpublic sales data to generate pricing recommendations, potentially violating US antitrust law.

McDonald’s is facing a proposed nationwide class-action lawsuit in the US over allegations that its AI-powered pricing system helped coordinate menu prices across franchise and company-owned restaurants. Michael Thomas, a customer from Illinois, filed a lawsuit on 2 October in the US District Court for the Northern District of Illinois against McDonald's, alleging that the company violated US antitrust laws by relying on nonpublic sales data to develop pricing recommendations, according to Reuters.

According to the complaint, since at least 2019, McDonald's has been using machine-learning technologies to analyse transaction data across its restaurant chain. McDonald's rejects the claims and said franchisees are responsible for determining their own prices.

What does lawsuit allege?

The 2 October court complaint said McDonald's relied on confidential sales information from its franchised and company-operated restaurants to develop location-specific pricing recommendations. The plaintiff alleges that disseminating those suggestions to independent restaurants violated the Sherman Antitrust Act.

“Independent businesses must set their prices independently,” the complaint states.

The lawsuit claims that McDonald's tracked franchisees who deviated from its suggested price points and coerced them into using the pricing tools. The plaintiff also alleged that it became mandatory to participate in the system from January this year.

How does McDonald’s AI pricing system work?

What did McDonald’s say?

In an official statement dated 1 October, McDonald's denied the allegations in a corporate statement titled Separating Fact from Fiction: AI Does Not Set Prices at McDonald's.

Pragya Singha Roy