Honeywell Sues Alarm.com For Violating Anti-Trust Laws (Settled)

By: John Honovich, Published on Feb 24, 2017

Is Alarm.com about to dominate the smart home software market?

That is what Honeywell alleges in its new lawsuit, first reported by CEPro.

Honeywell's complaint declares:

As a result of the proposed acquisition, Alarm.com would have approximately a 70% share in the market for the provision of Remote Services for dealer installed security systems. The creation of such concentration, which would injure competition, stifle innovation, and result in higher prices to consumers, is presumptively illegal. [emphasis added]

Inside this post, we share Honeywell's full complaint / filing, analyzing its claims (including Honeywell going open, their fears about being 'crippled', the critical role of ADT and Qolsys, the 'vicious cycle' they face) and its potential impact in the fast growing and critical smart home segment of the alarm / RMR business.

[Update: The lawsuit is settled. Analysis Inside.]

** *****.*** ***** ** dominate *** ***** **** software ******?

**** ** **** ********* alleges ** *** *** lawsuit,***** ******** ** *****.

*********'* ********* ********:

** * ****** ** the ******** ***********, *****.*** would **** ************* * 70% ***** ** *** market *** *** ********* of ****** ******** *** dealer ********* ******** *******. The ******** ** **** concentration, ***** ***** ****** competition, ****** **********, *** result ** ****** ****** to *********, **presumptively *******. [emphasis added]

****** **** ****, ** share *********'* **** ********* / ******, ********* *** claims (********* ********* ***** open, ***** ***** ***** being '********', *** ******** role ** *** *** Qolsys, *** '******* *****' they ****) *** *** potential ****** ** *** fast ******* *** ******** smart **** ******* ** the ***** / *** business.

[******: *** ******* ** settled. ******** ******.]

[***************]

Filings ******

**** ** **** **** ** *** full ********* ********* ******* Alarm.com/ ********, ***** ** Feb **, ****.

Key ***********

********* *********.***'* $*** ******* *********** of *** ******** ********** **** ** ********:

*****.***’* ******** ******** ** Icontrol ***** **** *****.*** the ******** ****** ******** platform

*** ******, ******* *********, would ** ******* ****** more ** *****.*** ******* its *********:

*** ******** *** *********** effect ***** ** ****** prices *** ****** ******** to ******** *******

*********** ** *****.*** ***** be ****, ******* *********:

*****.*** ***** ** **** to ****** **** ***** party ************* ** ******** hardware *** *****-**** ******* interoperate *********** **** *****.***.

*******, ****** / ** barriers ***** ** * problem, **** *********:

*****.*** *** ******** *** their ************ ******** ************ to ****** ********* ***********.

Smart **** / ****** ********

** ******* ** ***** have ************** ********* *******, of ***** ~* ******* use ***** **** / remote ******** ********* **** Honeywell, *****.*** ** ********, according ** *********. *.* million ** ***** * million ***** ***** *** purchased ******* * ******** dealer, **** *********.

****** ***** *** ***** home / ****** ******* software ** ********* ** Honeywell **:

  • *****.*** **% / *.** million (**** *****.*** ******** 2.6 ******* ** *** end ** ****, ****** their ****** ** ******* higher ***)
  • ******** **% / *.** million (******** **** *****.*** this ******* *** **% 'dominant' ********)
  • ********* **% / *.** million (*.*.,***** *******)
  • ****** **% / *.** million

Open ***** *** *********

** *** *********, ********* admits **** *** * closed ********:

*********, ********* **** ****** architecture. ************, * ******** can **** *** ********* Remote ******** ******** ** he **** **** * Honeywell ***** ******.

*******, ********* **** ** has ***** ** **** up:

********* *** ******** *** possibility ** ****** ** an **** ********* *** developed ******** ***** ** do **... ** *** made ***** ** **** its ****** ** ***** party ******** ******** ************* as **** ** ** to **** ********* *** option ** *** ********* security ******** **** ***** party ****** ******** *** vice *****.

**** ********* **** ******* being ****** *****, **** will ** ******* *******:

*** ****** ***** ***** Alarm.com/Icontrol ** ****** *********’* ability ** ********* ** maintain **************** **** ***** party ******** *** ****** manufacturers. **** **** **** stymie *********’* ******* ** open *** ******** ** third ***** ******** ******** and ********* **** *********’* ability ** ******* *** platform ** ***** *************’ smart-home *******.

'Crippled' ********* **** ***

********* ***** ***** ********, specifically **** ***:

*** ****** ***** ***** Alarm.com/Icontrol ** ****** ********* by *********** *********’* ********** relationship **** * **** important ********, ***, *** largest *********** ******** ****** dealer *** **** ** important ******** ** ******** system ********. **** ***** cripple ********* ** * Remote ******** **********.

************, ********* ***** **** hardware ***** ** ***:

*** ********* ****** ******** from ******** *** ******** (alarm *******) **** ******** sources ********* *********.

** ********* ******** **** Alarm.com **** ***** ********* hardware *** **** *** moves ** *****.***'* ********. In **********, *** ******* beneficiary ********:

*****.*** *** * ********* interest ** ***** ****** manufacturer ******. *** ****** company **** **** ** incentive ** ****** *** hardware ***** **** **** Honeywell *** ****** ******.

*** ******* ***** ** drasticly ******** ** *********, says *********:

*** ******** *** * significant ******* ** *********’* hardware *****. *********** ** diminution ** *** ********** relationship ***** ****** ** drastic ********* ** *********’* installed **** *** ******* stream.

Vicious *****

********* ********* **** ****:

** ********* ***** ******* and ***** ******, ** will ** ****** ** retrench ********** ** *** platform. * ******* ***** unfolds: *** **** ***** Honeywell *****, *** **** attractive *** ******* *******, causing ** **** *** additional *****.

Litigation ** *********

***** **** ** *********'* feel **** ********* *** come **** ******* **** Honeywell's ************ ****. ** course, ** ***** ** anti-trust *********, *** ************ need ** ** ** bleak ** ******** ** show *** ****. ** is *** ***** ** Honeywell ***** ******** *** future ** ******** **** dire ** **** ** it ** ****** *** case *** *** *********.

Vote / ****

Lawsuit *******

*** ******* *** ******* in ***** ****. ***** details **** *** *********, we ****** **** *****.*** provided **** *********** / agreement ** **** ** the ******** *********** ****** Honeywell ******** ** (*.*., blocking **** ***, ***.). Alarm.com ********** ***** **** logistically (******** *** ***** on ** ******* ****) and ********** (*** ******** millions ******** ******* * much ****** ******* ******* they **** '*****' ** 'wrong') **** ******** *** suit.

Comments (19)

A small part of Honeywell's panic could be attributed to the fact that they have pushed out all of the former Ademco regime that would have been in tune much earlier on with this threat. This same Honeywell also allowed future founders of 2GIG to develop their technology while on Honeywell's employment dime and did nothing to thwart them when they left and took that playbook to compete against Honeywell...

Interesting read, thank you. I might make note that Honeywell has had a very similar relationship with ADT for years and years and years, and while integrators complained, no one ever filed a suit over it that I know of. The public was largely blind to the Honeywell/ADT arrangement. Anti-trust exist to promote fair competition for the protection of the consumer, not a particular manufacturer. As I read their complaint, I would agree with their assessment on the impact of their business. I just don't see how it harms the consumer. I voted no by the way.

Honeywell was going to open up their platform?!? What a fucking lie/joke. Maybe if you fixed your software so end users could maybe...I don't know...see and control both partitions remotely? Or maybe it was the fact that if you buy a system from separate dealers, there is no hope of a single login to get to ALL your systems remotely? A great case of old vs. new. Hang on to thermostats big H! It's all you have left!

AFAIK Honeywell has plans for a single piece of software to control things that is slated for FY2018 Q1-2 that's at least on the enterprise side. I heard that the same is occurring lower on the food chain. Seems plausible given the maxpro cloud stuff.

What a weak crybaby move by Honeywell. Embarrassing actually. They just need to admit that their software pales in comparison to Alarm.Com. Once they admit that, they may be able to fix the problem and actually compete.

Good for Alarm.Com, talk about a company firing on all cylinders!

I disagree on the crybaby part of things. Alarm.com has had the luxury of coming into the market without having to deal with legacy systems and legacy communication formats etc. They have really eaten the RMR lunch more so of the smaller/regional traditional alarm companies with a central than honeywell. It's pretty nice to only need to support one product and modern communication paths. Most regional alarm companies with centrals have been in the industry or were formed right after AT&T's anti trust breakup. What we are seeing now is a trend back towards consolidation in the market that is being accelerated by the new entrants. It's really easy to criticize the older companies in this industry as not moving fast enough, but it's not like you can go back to the year 2000 and abandon half your customers because you know that the up and comers are going to be straight cell/ip communicators with an interactive platform. It's really difficult to pivot as fast as people think you should. There's a reason there aren't very many 100 year old companies in any industry.

Hard to fully blame honeywell since they have a legacy of customers they have needed to support versus being able to invest everything in a single product limited market offering. Alarm.com has picked off the new installs and that part of the market and I would assume is going to try to disrupt and move upstream. Problem is that part of the market isn't as fickle and tends to be a lot sticker as a customer base. It's the same problem Hikvision is running into. Let's not forget even in 2013 AOL still made $52mm a month in subscription fees for dial-up.

"Without having to deal with legacy systems?" You sound as if that were a burden. Honeywell has been an established successful business for quite a long time, they have the money and resources to run an R&D team that focused primarily on cutting edge technology and staying ahead of the game but this is where they failed, they either didnt put enough emphasis on this or simply went the wrong route somewhere and the better technology has won out. This is classic competition and "survice and adapt". Now Honeywell is on their heels and the only thing they know to do is file an anti-trust suit which in my opinion, makes them look very weak and outdated.

Honeywell is on their heels and the only thing they know to do is file an anti-trust suit which in my opinion, makes them look very weak and outdated.

I agree if you read the complaint or our summary, it makes Honeywell look weak / defensive.

However, most people are only going to see the headline - big strong Honeywell sues small Alarm.com. And Honeywell has a market cap ~80x Alarm.com's.

And my suspicion is that Honeywell wants this public. For example, CEPro posted on this the morning after the complaint was filed, meaning someone very close to the suit tipped them off. I don't know who told CEPro but it would make most sense for a Honeywell person to do so. Also, typically the suer, especially a bigger company, benefits from news of a lawsuit since it can create a chilling effect on the smaller company (i.e., "Oh no, Honeywell is going after Alarm.com maybe we should wait to work with them, etc.").

I dunno, maybe your right, but I think the complete exact opposite. Im thinking "Oh wow, Honeywell is suing Alarm.com, they must be a really big disruptor to ruffle Honeywells feather, I gotta check them out"

When I think Honeywell, I think of the companies who did so well doing analog CCTV for so many years and was content on doing so and never really progressed and by the time they did start to progress, it was already too late. Perhaps its not this extreme but thats my drift.

I agree Sean, the problem with your thinking is that you forgot that Honeywell was spending the last 17 years taking profits out of the former Pittway group companies to get their investment back rather than putting any innovation back in...that is why they bought them ...you're just not being practical! :)

I very much appreciate your Longview thinking and perspective. I learned a lot from it that I will carry with me.

That's right, there aren't too many 100 year old companies!

When did Honeywell acquire ADI?

2000. As with most big acquisitions, the culture immediately changed. Execs from other divisions came flying in to finish off the management that built Pittway.

The same time they acquired Pittway...2000

If you combined all the methods Honeywell has deployed to win at this game this makes me really laugh.

If you combined all the methods Honeywell has deployed to win at this game this makes me really laugh.

Is that a pro or anti-Honeywell sentiment?

Neither Pro or against, just an observation. From the early days of AlarmNet through lending money to convert dealers and owning multiple technologies in the same industry, while owning an alarm company for a brief period.....it's just odd for them to cry foul.

Sounds like Honeywell losing at their own game??

Update: The lawsuit was settled. While details were not disclosed, we assume that Alarm.com provided some concessions / agreement on some of the specific competitive issues Honeywell objected to (e.g., blocking them out, etc.). Alarm.com absolutely gains both logistically (avoiding the delay on an ongoing suit) and monetarily (not spending millions fighting against a much larger company whether they were 'right' or 'wrong') from settling the suit.

Login to read this IPVM report.
Why do I need to log in?
IPVM conducts unique testing and research funded by member's payments enabling us to offer the most independent, accurate and in-depth information.

Related Reports

Startup Vaion Launching End-to-End AI Solution Backed with $20 Million Funding on Jun 17, 2019
An EU / USA video surveillance startup, Vaion, founded by ex-Cisco Senior Directors is launching an end-to-end VSaaS platform with $20 million in...
Sighthound Transforms Into Enterprise AI Provider Profile on Jun 14, 2019
Sighthound is now rapidly expanding its R&D team, building an enterprise AI service. This may come as a surprise given their origins 6 years...
False Verkada 'Unrivaled' Low Light Performance Claim Removed on Jun 12, 2019
Verkada falsely claimed that it delivered 'UNRIVALED LOW LIGHT PERFORMANCE' until IPVM questioned. In fact, Verkada's low light performance is...
Carnegie Mellon AI Startup Zensors Profile on Jun 11, 2019
Zensors is a startup formed by Carnegie Mellon graduates from a Carnegie Mellon research project, offering customized models per camera that they...
Nortek and SDS Fight Over Failed Settlement on Jun 05, 2019
Distributor SDS said they reached a deal with Nortek but Nortek says no settlement was reached and the suit is still on. In this post, based on...
Startup Rhombus Systems Says Twice the Features, Half the Price of Verkada on Jun 04, 2019
Closed cloud systems may be the fastest growing segment of video surveillance with Meraki and Verkada. Now another California company is joining...
China / US Trade War Impact Splits Industry on Jun 04, 2019
As the trade war continues to heat up, 170+ integrators told us "What impact will the US / PRC China conflict have on the industry?" Respondents...
Panasonic Sells Off / Spins Out Security Business on Jun 02, 2019
Panasonic has sold off its security systems business to a private equity firm, after suffering years of challenges. The new company, which will...
Verkada Favorability Results 2019 on May 29, 2019
Verkada has taken the industry by storm with the fastest growing video surveillance sales organization ever and a half billion dollar valuation....
Dahua USA Celebrates 5 Years of Errors on May 22, 2019
Dahua USA is, in their own words, 'celebrating' 5 years in North America or as trade magazine SSN declared: Dahua Technology finds success in...

Most Recent Industry Reports

Repositionable Multi-Imager Camera Shootout - Avigilon, Axis, Dahua, Hanwha, Hikvision, Panasonic, Vivotek on Jun 19, 2019
Repositionable multi-imager cameras are one of the fastest growing segments in video surveillance, with a slew of new offerings being recently...
Genetec Synergis Cloud Link - Complex, Costly and Confusing on Jun 18, 2019
Genetec's Synergis Cloud Link is complex, costly and confusing compared to competitor access control architectures. Inside this note, we examine...
Startup Vaion Launching End-to-End AI Solution Backed with $20 Million Funding on Jun 17, 2019
An EU / USA video surveillance startup, Vaion, founded by ex-Cisco Senior Directors is launching an end-to-end VSaaS platform with $20 million in...
Biometrics Usage Statistics 2019 on Jun 17, 2019
While face and fingerprint recognition are used regularly for smartphones, it is not as common in physical security. In this note, we examine...
The Scheme Hikvision and China Importers Use To Avoid Tariffs on Jun 17, 2019
Hikvision and numerous China importers are avoiding 25% tariffs by including an SD card slot in their IP cameras to claim they are 'digital still...
Sighthound Transforms Into Enterprise AI Provider Profile on Jun 14, 2019
Sighthound is now rapidly expanding its R&D team, building an enterprise AI service. This may come as a surprise given their origins 6 years...
ADT Eliminating Acquired Brands, Unifying Under 'Commercial' Brand on Jun 14, 2019
ADT is eliminating the brands of the many integrators it has acquired over the past few years, including Red Hawk, Aronson Security Group (ASG),...
NSA Director Keynoting Dahua and Hikvision Sponsored Cybersecurity Conference [Canceled] on Jun 13, 2019
The technical director for the NSA’s Cybersecurity Threat Operations Center will be keynoting a physical security cybersecurity conference that is...
Farpointe Data Conekt Mobile Access Reader Tested on Jun 13, 2019
California based Farpointe Data has been a significant OEM supplier of conventional access readers for years to companies including DMP, RS2, DSX,...
Embattled $400 Million China Funded Philippines Surveillance System Proceeds on Jun 13, 2019
An embattled 12,000 camera surveillance system project that will cost ~$400 million will proceed.  The project contract was awarded, had its...

The world's leading video surveillance information source, IPVM provides the best reporting, testing and training for 10,000+ members globally. Dedicated to independent and objective information, we uniquely refuse any and all advertisements, sponsorship and consulting from manufacturers.

About | FAQ | Contact