McDonald’s hit with class action alleging AI-powered menu price-fixing

A proposed nationwide class action lawsuit has been filed against McDonald's in federal court in Chicago, alleging the fast-food giant illegally colludes with its franchisees to fix menu prices using an AI-powered system. The lawsuit claims McDonald's violated US antitrust law by conspiring with independent operators to set prices using algorithms trained on proprietary data.

Reuters reported that McDonald's pricing engine employs machine-learning algorithms to continuously analyze vast amounts of transaction data from its approximately 14,000 restaurants. The lawsuit referenced this article, along with the growing trend among other fast-food chains to utilize AI for pricing and operational purposes.

According to the complaint, independent franchisees must set their own prices, but McDonald's allegedly uses its extensive data resources and franchising model to manipulate menu pricing to the detriment of consumers. The lawsuit cites the Reuters report and highlights the broader issue of companies using algorithms to illegally coordinate prices for various goods and services.

McDonald's responded to the allegations, stating that the lawsuit's claims are "speculative and uninformed." The company emphasized that AI does not determine the price of iconic items like the Big Mac, and that pricing decisions are ultimately made by franchisees. McDonald's also noted that the use of pricing recommendation tools and analytics is common across various industries.

The plaintiff, an Illinois resident, is seeking to represent a class of potentially millions of McDonald's customers and is seeking damages for what they allege is a deceptive pricing practice that erodes consumer choice and drives up costs.