McDonald's has been sued in a proposed nationwide class action alleging that the fast-food company illegally coordinated menu prices across its franchised and company-owned restaurants through an artificial intelligence-powered pricing system.
According to a report by Reuters, the lawsuit, filed in federal court in Chicago on Friday, alleges that McDonald's conspired with independent franchisees to fix prices using algorithms trained on nonpublic information, violating US antitrust law.
The case cited a Reuters report that said the company's pricing engine uses machine-learning algorithms to continuously analyse information from millions of daily transactions across nearly 14,000 restaurants.
The report also said other fast-food companies were increasingly using artificial intelligence (AI) to assist with pricing and other business operations.
McDonald's denies AI sets menu prices
McDonald's rejected the allegations in a statement on Monday, describing them as speculative and uninformed.
"AI does not set the price of a Big Mac or any other menu item," the company said.
McDonald's said its franchisees independently determine their prices and added that pricing recommendation tools and data analytics are widely used across industries.
The lawsuit, however, argues that independent businesses must determine prices independently.
Lawsuit seeks nationwide customer class
The plaintiff, an Illinois resident, is seeking to represent potentially millions of McDonald's customers across the US.
Lark Turner, a lawyer representing the plaintiff, alleged that McDonald's was using its large volume of data and franchise network to extract additional money from consumers.
The case comes amid growing scrutiny in the US over the use of algorithms and AI in determining prices.
Plaintiffs have filed several class actions in recent years alleging that businesses used algorithmic tools or AI to coordinate prices in sectors including hotel rooms and apartment rentals.
The latest lawsuit similarly focuses on whether the use of data-driven pricing technology across McDonald's restaurant network resulted in unlawful price coordination.
McDonald's has denied that its AI tools determine menu prices and maintains that individual franchisees retain control over their pricing decisions.
