McDonald's sued over AI tool that recommends dynamic pricing for U.S. franchises

McDonald's is facing a federal lawsuit that alleges its use of an AI tool to determine pricing across independent franchises violates antitrust laws. The lawsuit claims that the tool allows independently owned franchises to exchange nonpublic price and sales information, which prosecutors say 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. However, according to the CityNews report, the AI-enhanced pricing tool uses artificial intelligence to collect data that competing franchises wouldn’t normally share, like store-level sales.

McDonald's has responded to the lawsuit, stating that it is "filled with inaccuracies" and that it will "vigorously defend itself." The company also said that "AI does not set menu prices at McDonald’s restaurants – McDonald’s franchisees do," and that optional tools are available to franchisees to help them make the best decisions for their businesses and customers.

Brief written by urgent.news from Guardian Business, Guardian Technology, CityNews, Winnipeg Free Press, Quartz — 5 reports on this story. Machine-written — may contain errors; check the original before relying on it.