McDonalds CEO questioned over AI pricing tools by Elizabeth Warren, Democrats | Latest Tech News
Senator Elizabeth Warren and 4 other lawmakers questioned McDonald’s use of algorithmic pricing tools in a letter to CEO Chris Kempczinski, which the lawmakers shared with GWN.
The letter, dated Nov. 2, cites a GWN story from Sept. 29 that discovered McDonald’s makes use of machine learning algorithms to generate what the company calls the “optimal price” suggestions for each menu merchandise at each restaurant, based in half on an estimate of how a lot each store’s typical patrons are prepared to pay.
“We are concerned that McDonald’s may be using AI to squeeze consumers into paying higher prices, and that its AI pricing tools may facilitate collusion between franchisees who should be operating as competitors,” reads the letter, which was signed by Warren, a Massachusetts Democrat, along with Democratic Representatives Greg Casar (D-Texas), Becca Balint (D-Vt.), Jesus Garcia (D-Ill.) and Mary Gay Scanlon (D-Pa).
The letter asks CEO Chris Kempczinski whether or not the pricing tools use particular person shopper data from McDonald’s loyalty program. REUTERS
The letter asks Kempczinski a number of questions, including whether or not the pricing tools use particular person shopper data from McDonald’s loyalty program, how franchisees could be inspired to use the tools, and what antitrust review was completed before the tools’ deployment.
The lawmakers requested a response by Nov. 16.
McDonald’s didn’t reply to a request for remark about the letter. In a assertion following the earlier reporting by GWN, it said its pricing tools don’t base suggestions on particular person clients.
“AI pricing tools may facilitate collusion between franchisees who should be operating as competitors,” reads the letter, which was signed by Sen. Elizabeth Warren and 4 other House Democrats. Zuma / SplashNews.com
Three franchisees told GWN for its September story that the pricing engine’s suggestions have widened price variations between close by eating places. Christopher Sadowski for NY Post
It also said its franchisees are free to set their own costs and that its pricing tools are “not a mandate.”
The company also described GWN reporting as “speculative and uninformed” claims that “attempt to recast a standard business practice as something controversial.”
Three franchisees told GWN for its September story that the pricing engine’s suggestions have widened price variations between close by eating places.
Two shopper class motion lawsuits have been filed in federal court in latest weeks alleging the company illegally coordinates menu costs across franchisees and company-owned eating places through a centralized algorithmic pricing system.
“AI does not set the price of a Big Mac or any other menu item,” the company said after the first swimsuit was filed. It said franchisees make their own pricing choices and that the use of pricing advice tools and analytics is widespread.
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