McDonald’s sued over AI tool accused of enabling price-fixing

McDonald’s is facing a federal lawsuit alleging that its AI-powered pricing tool violates antitrust laws. The lawsuit, filed in Illinois, claims the tool shares nonpublic data among franchisees in the same market, enabling what it calls algorithmic price-fixing. The plaintiff, Michael Thomas, argues that the system has driven up prices for customers already struggling financially. McDonald’s denies the allegations, stating that the tool is optional and does not automate or coordinate pricing.

The fast-food giant has used the AI tool for over a decade, recommending prices based on factors like store sales, location, and competitor prices. McDonald’s maintains that franchisees, who own 95% of its 14,000 U.S. locations, make their own pricing decisions. However, the lawsuit suggests that McDonald’s exerts significant influence over franchisees to follow its recommendations.

McDonald’s has been testing various value strategies to attract lower-income customers, but franchisees do not always adopt its proposals. CEO Chris Kempczinski recently noted that only 60% of U.S. restaurants offered a $3 menu as suggested. The lawsuit seeks class-action certification and damages, aiming to block McDonald’s from enforcing agreements that restrict competition.