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

WASHINGTON - McDonald’s has been sued in federal court in Chicago in a proposed nationwide class action alleging the fast-food company illegally coordinates menu prices across its franchises and company-owned restaurants through an AI-powered pricing system.

The lawsuit, filed on Oct 2, said McDonald’s violated US antitrust law by conspiring with independent franchisees to fix prices using algorithms trained on nonpublic data.

Reuters reported last week that McDonald’s pricing engine uses machine-learning algorithms to continually analyse data from millions of daily transactions across its nearly 14,000 restaurants.

The lawsuit cited the Reuters article, which said other fast-food companies are also turning to AI to help with pricing and other operations.

“Independent businesses must set their prices independently,” the lawsuit said.

McDonald’s, in a statement on Oct 5, called the allegations speculative and uninformed.

“AI does not set the price of a Big Mac or any other menu item,” the company said. It said franchisees make their own pricing decisions, and that the use of pricing recommendation tools and analytics is widespread across industries.

US plaintiffs have filed a wave of class actions in recent years alleging that companies used algorithms or AI to illegally coordinate prices for hotel rooms, apartment rentals and other purchases.

Lark Turner, a lawyer for the plaintiff, said in a statement, that McDonald’s is “leveraging its troves of data and its franchised system to nickel-and-dime consumers down to the last French fry.”

The plaintiff, an Illinois resident, is seeking to represent a class of potentially millions of McDonald’s customers, the lawsuit said. REUTERS