McDonald's faces antitrust class action over AI-driven dynamic pricing
McDonald's is facing a proposed class-action antitrust suit alleging it coordinated prices with its franchisees using AI-generated price recommendations, a practice the plaintiffs say dates back to 2019 across roughly 14,000 US restaurants. McDonald's disputes the claims, saying "AI does not set the price of a Big Mac or any other menu item" and that franchisees set their own prices. A lawyer for the plaintiffs accused the chain of "leveraging its troves of data and its franchised system to nickel-and-dime consumers down to the last French fry."
The case could help define where AI-assisted pricing sits under antitrust law, and highlights how little visibility consumers have into algorithms that shape the prices they pay.
- McDonald’s is being sued over its use of dynamic AI pricing
- The lawsuit alleges it colluded with franchises to set prices
- McDonald’s denies the allegations made in the antitrust case
How would you feel if you got charged more for your McDonald’s meal simply because some opaque AI algorithm decided you should? You’d probably be pretty unhappy, and the practice is now in the spotlight as the fast-food chain is being hit with an antitrust lawsuit over its usage.
The proposed class-action suit alleges that McDonald’s has coordinated pricing between the chain itself and its independent restaurants that operate as part of its franchise system. It claims that, instead of competing among themselves on affordability, McDonald’s franchises are colluding to set prices recommended by AI algorithms, potentially inflating the costs charged to consumers as a result.
According to Reuters, McDonald’s uses its AI algorithm to set prices at roughly 14,000 restaurants in the US and can suggest prices for individual menu items. It considers various data factors, including local purchasing behavior and estimates of the prices consumers will be willing to pay in different locations. But this hasn’t gone down well with everyone.