I don’t think it’s as big a legal minefield as you suggest. You just need the right integrations in place, and as you said, figure out the regulations (often at a county level). But it’d a solvable problem.
My guess is that this business is very sticky so it’s hard to get new people started… plus you’re making a lot of SKUs in hardware that you need to keep in inventory, software up to date, once you buy the hardware you don’t upgrade it, it’s not very sexy, etc.
That minefield is a 3 legged stool
1. Actual Legal Liability
2. Perceived Legal Liability
3. PR Liability around the law / legal system
#1 is probably not very big, however if you put a smoke alarm in someones home that does not work correctly or perceived to not work correctly and your a name like Google that the media loves to report on... well #2 and #3 become HUGE.
law suits will be filled, and even if you "win" in actual court, the court of public opinion will not be favorable
Note many alarm companies can still link to it one way or another; in fact I use the nest products with Ring via something that listens for its chirps.
You can also sell alarm service without fire, and vice versa. Or use a third party product whitelabeled, as many do with First smoke alarms.
If you look at their Nest Secure offering, it was always half baked. They didn’t have enough accessories to make a compelling line up. Rather than legal liability, it seems far more likely to be another half-in-half-out product that Google is infamous for rolling out and then killing a few years later.
That is why you do not see as much activity in Security or Fire Alarms as you to other Home Automation, and most likely why Google went with ADT instead of rolling their own with Nest... Someone in legal look at that and said "Yea lets let ADT lawyers deal with that"