Lawsuit against McDonald's: AI tool shares data with franchisees

McDonald's has been sued in federal court in the US over an artificial intelligence tool that helps franchisees set menu prices. The lawsuit was filed on Friday in the state of Illinois and alleges that the company violated antitrust laws.

According to the lawsuit, the pricing tool collects data such as store-level sales through artificial intelligence and exposes it to rival franchisees who would not normally share it with one another. The complaint also states that the tool has caused prices to rise in the US: "The result is algorithmic price coordination aimed at customers who are already struggling."

McDonald's has stated that the lawsuit is "full of inaccuracies" and that it will defend itself vigorously. According to the company's statement, menu prices at US restaurants are set by franchisees, not by artificial intelligence; the tool is optional and does not automate, coordinate or fix prices.

The lawsuit was filed on behalf of DeKalb resident Michael Thomas. According to the complaint, Thomas frequently visits McDonald's and has noticed price differences between restaurants near his home. McDonald's says it has used the AI-powered pricing tool for more than a decade; the program determines the optimal price based on factors such as store sales, location and competitors' prices. The company notes that 95% of US restaurants are franchisee-owned.

For franchise networks in Azerbaijan, this highlights the legal side of data flow when using centralized tools in pricing decisions: sales or margin data passed to franchisees can create risks from a competition law perspective.