Suit says AI tool allows independently owned franchises to exchange nonpublic price and sales information
McDonald’s is facing a lawsuit in federal court over its alleged use of an AI tool to determine pricing across independent franchises, which prosecutors say violates antitrust laws and has unfairly inflated menu prices for Americans.
The vast majority of McDonald’s US stores are independently owned and are said to individually decide on prices under company policy. Antitrust laws require businesses to set prices independently from their competitors, as coordinating prices can stifle market competition and push up costs for consumers.
The lawsuit, filed on 2 October in a federal Chicago courtroom, alleges that McDonald’s AI tool is illegal because it amounts to independent franchise locations exchanging nonpublic price and sales data.
What. That’s ridiculous.
and are said to individually decide on prices under company policy.
They individually agree to the recommended price or what? That curiously also works out with the recommended contracts, wages, design, costs of the design, maintenance and everything?
Either it’s all wrong, or the AI is also fine.
This will be interesting. McDonald’s seems to be opening with “nothing is setting prices for them!” which seems a little disingenuous if it’s true that it’s being pushed from corporate and the franchisees have to account for deviations. I almost feel like the stronger argument would be that McDonald’s allocates franchises in a way that ensures they’re not direct competitors, mostly with geographic exclusivity. For this purpose, it would seem the “competition” is really other fast food restaurants. A variation of argument is how, for instance, Sirius and XM satellite radio got their merger approved: “XM is not my only competition, radio, CDs, iPods, and even this crazy new thing of streaming audio over a cell phone connection… that’s our competion.”
Guy with a good credit score and poor impulse control walks into McDonald’s high as a kite. The pricing AI jizzes in its pants as it sets up a 24 month payment plan for his Big Mac menu.
