Today’s ESG Updates
- McDonalds’ AI Pricing Software Antitrust Worries: McDonald’s is facing potential antitrust scrutiny over a larger industry trend of using AI to set prices. With the rise of AI tools for pricing, worries are increasing over how antitrust rules will be defined.
- UK Heat Pump Subsidies Cut in Defense Spending Bid: Ministers will be removing heat pump subsidies and cutting back on energy & net zero department spending to make space for defense budget increases.
- Microsoft President Compares AI and Milk Regulation: Microsoft’s President Brad Smith has raised concerns over AI, contending that it is regulated less than “your washing machine” or a “carton of milk.”
AI pricing collusion lawsuit hits McDonald’s
McDonald’s faces antitrust scrutiny over alleged AI pricing collusion, in a new case among a series of lawsuits against companies accused of using the technology. McDonalds’ 14,000 franchises are free to set their own prices; however, they are expected to use the proprietary ‘pricing engine.’ While using an algorithm such as AI to set prices is not an inherent violation of antitrust procedure, new AI tools give other companies access to internal pricing decisions, creating potential for collusion.
In July, a federal appeals court reinstated a lawsuit claiming Atlantic City casino-hotels had used shared pricing software to coordinate increased room rates. The Philadelphia-based 3rd US Circuit Court of Appeals said past technologies presented limited opportunities for communication among companies, but that “today, these algorithms have the capacity to bridge any such gaps.” The 9th US Circuit Court of Appeals last year ruled the use of shared-price recommendation software among Las Vegas hotels was not enough to uphold an antitrust ruling, siding against the lawsuit.
RealPage has been involved in a spree of lawsuits, some ongoing and some settled, that claimed apartment complex owners used its tools to inflate rental prices. The company claimed a victory last month when it convinced a federal judge in New York to block a state law preventing landlords from algorithm-powered pricing tools. The judge ruled the practice “normal commercial conduct,” stating it could not bar the practice “just because it is facilitated by software.”
The lawsuit against McDonald’s alleges that company franchises have colluded using shared pricing software. Daniel Frances, who teaches antitrust law at New York University’s law school, said an important factor in the case would be franchisees’ ability to independently set prices, but that being franchises, price coordination would be natural. “These branches are just not competing with each other in any plausible sense,” and that “the presence of an algorithm changes none of that”, he stated.
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Ministers in the UK will remove heat pump subsidies to pay for defense budget
Ministers look to slash heat pump subsidies in the scramble to find more than £15 billion for defence spending. Plans were agreed to by former energy secretary Ed Miliband and former prime minister Keir Starmer, and are to be implemented by current energy secretary Miatta Fahnbulleh. Energy officials say the cuts are outbalanced by the growth of the energy department’s capital budget, which is among the fastest-growing. Cuts of £2 billion will be used to pay for the defence investment plan (Dip).
Sources say the government will also be cutting part of the boiler upgrade scheme (BUS) for England and Wales, which provides grants of up to £9,000 to switch to cleaner heat. Bloomberg reported this month that ministers would reduce funding for carbon capture and storage (CCS) schemes, where a previous spending plan would have included £21.7 billion in spending. CCS supporters note that it is the best way to offset emissions from North Sea Oil, as plans for the Jackdaw gasfield are expected to be given approval by ministers as soon as next week.
Chancellor John Healer now must find an additional £4.7 billion in savings over four years, above what departments had already agreed.
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Microsoft president says AI less regulated than milk
“Right now, your washing machine is subject to more safety rules than AI. Every carton of milk that you see in the grocery store is subject to safety rules and inspection,” said the president of Microsoft, Brad Smith, in an interview with the BBC published on Monday. Smith raised concerns over AI breaches into systems, and said victims should be informed if their systems are breached by rogue AI agents, and that an “emergency brake” should be available.
Tech companies such as Anthropic and OpenAI have recently disclosed behaviour by ‘rogue agents’, igniting a debate on the global stage on the threats posed by AI. Some researchers contend it may be an existential risk to humanity.
Smith noted that the country best suited to lead regulation on AI was Britain, because of the AI Security Institute launched under former prime minister Rishi Sunak. He noted that Washington viewed London vastly differently from how Brussels is viewed. AI minister Kanishka Narayan told Reuters Britain could consider regulating advanced AI models if the present regime proved insufficient.
Editor’s Note: The opinions expressed here by the authors are their own, not those of impakter.com — Cover Photo Credit: Piki Poki
