McDonald's is facing a nationwide class-action lawsuit that accuses the fast-food giant of using an AI-powered pricing system to coordinate menu prices across its U.S. restaurants, days after the company publicly insisted that "AI does not set the price of a Big Mac or any other menu item." The lawsuit, filed in federal court in Chicago on October 2, alleges that McDonald's violated U.S. antitrust law by conspiring with independent franchisees to fix prices using algorithms trained on nonpublic pricing data. The plaintiff, Michael Thomas, is seeking to represent potentially millions of McDonald's customers nationwide. Newsweek has contacted the company for comment.
On October 1, McDonald's published a fact-checking statement titled "Separating Fact from Fiction: AI Does Not Set Prices at McDonald's," arguing that media outlets had misrepresented its practices. "There's been inaccurate reporting about how menu prices are set at McDonald's. So let's set the record straight," the release said.
The company said franchisees independently decide menu prices, and that its pricing tools merely provide recommendations based on local market conditions. It also denied using dynamic pricing or charging different amounts based on what individual customers are willing to pay. However, a investigation published a few days earlier, which the lawsuit cites, reported that McDonald's pricing engine uses machine-learning algorithms to analyze millions of daily transactions across almost 14,000 U.S. restaurants and generate what the company calls the "optimal price" for menu items at individual locations. reported that the system incorporates factors such as local demand, competitor pricing and estimates of customer willingness to pay.
The lawsuit argues that the system suppressed competition because independently operated franchise restaurants should set prices independently, but instead allegedly used pricing recommendations generated by a common algorithm trained on pooled, nonpublic competitor data. AI pricing, sometimes called algorithmic pricing, uses machine learning and large datasets to recommend prices based on factors such as local demand, historical sales, operating costs, competitors' prices and consumer behavior. Companies say such systems help businesses respond more effectively to local economic conditions.
Critics, however, argue that when many businesses rely on the same algorithm or shared datasets, prices can become more closely aligned, potentially reducing competition. This concern has already triggered lawsuits involving apartment rents, hotel pricing and other industries. For consumers, the controversy centers on the possibility that AI could recommend higher prices based on what customers in a specific area appear willing to pay. reported that McDonald's system includes estimates of customer willingness to pay in local markets, although the company says restaurant operators make the final pricing decisions.
McDonald's has strongly rejected the lawsuit's allegations. It maintains that franchisees decide whether to accept pricing recommendations and that analytics tools are widely used throughout the business world. The company also says it does not use dynamic pricing, meaning menu prices don't automatically change in real time based on demand, time of day or individual customers.
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