18 hrs ago
McDonald’s Faces Antitrust Suit Over AI-Driven Pricing Recommendations
A customer has sued McDonald’s over a tool that gives restaurants price suggestions.
The lawsuit says McDonald’s used private sales information from its restaurants to make those suggestions.
It also claims the company pressured franchise owners who did not follow them.
McDonald’s says the tool only gives advice and does not set prices.
The company says franchise owners decide their own prices and whether to use the advice.
A report cited in the articles found different Big Mac prices at two Fresno restaurants, but could not confirm that the tool caused the difference.
The lawsuit says sharing suggestions based on private information may break antitrust rules.
The case may help examine how pricing tools affect businesses that are supposed to set prices independently.
Illinois customer Michael Thomas filed a proposed nationwide class-action lawsuit against McDonald’s on October 2 in federal court in Illinois.
The complaint alleges that since at least 2019 McDonald’s has used nonpublic sales data to develop and distribute restaurant-specific pricing recommendations.
The plaintiff claims McDonald’s tracked franchisees who rejected suggested prices and made participation in the pricing system mandatory from January.
McDonald’s denies that AI sets or changes menu prices, saying franchisees independently decide their prices and whether to use the recommendations.
The case raises questions about whether recommendations based on shared, confidential data can influence prices at independent businesses.
- Who
- Michael Thomas, an Illinois customer, sued McDonald’s; the proposed class could include McDonald’s customers.
- What
- A proposed nationwide class-action lawsuit alleges that McDonald’s pricing recommendations based on nonpublic sales data violate US antitrust law.
- Where
- The case was filed in the US District Court for the Northern District of Illinois.
- When
- The lawsuit was filed on October 2; the complaint says the system has been used since at least 2019 and participation became mandatory from January.
- Why
- The plaintiff alleges that sharing recommendations based on confidential sales data could influence prices at independent restaurants and violate antitrust law.
Plaintiff’s allegations
McDonald’s response
Effect of recommendations
Plaintiff’s allegations
The lawsuit alleges that recommendations developed from nonpublic restaurant sales data and shared with restaurants could coordinate prices and violate antitrust law.
McDonald’s response
McDonald’s says AI provides recommendations but does not determine or adjust menu prices; franchisees set their own prices.
Franchisee participation
Plaintiff’s allegations
The complaint claims McDonald’s tracked franchisees who deviated from suggested prices, pressured them to use the tools, and made participation mandatory from January.
McDonald’s response
McDonald’s says franchisees independently decide whether to adopt the recommendations.
Pricing practices
Plaintiff’s allegations
The plaintiff challenges the sharing of pricing suggestions derived from confidential sales information.
McDonald’s response
McDonald’s says using costs, competition, and customer demand in pricing tools is common business practice, and local market conditions can vary.
Key facts
- Plaintiff
- Michael Thomas, an Illinois customer
- Defendant
- McDonald’s
- Filing date and court
- October 2, in the US District Court for the Northern District of Illinois
- Law cited
- Sherman Antitrust Act
- Alleged system history
- The complaint alleges McDonald’s has used machine-learning technology to analyze transaction data since at least 2019.
- Reported data scale
- Reuters reported that the pricing engine can analyze millions of transactions daily from almost 14,000 US restaurants.
- McDonald’s response
- The company says AI does not set or adjust menu prices and franchisees independently set prices and decide whether to use recommendations.
- Reported price example
- Reuters cited Big Mac prices of $5.69 and $6.89 at two Fresno restaurants two miles apart, but could not confirm the AI recommendations caused the difference.
Quotes
The lawsuit complaint
The court complaint filed by Michael Thomas against McDonald’s.
“AI is not the one that determines what a Big Mac costs or any other item on the menu.”
livemint.com
“AI does not set the price of a Big Mac or any other menu item.”
businesstoday.in
Sources
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