Whenever a user installs a Chrome extension, a warning message is shown about the permissions required by that extension, exactly similar to the app installation prompt on the Android. This is very helpful for the users, as it warns them about the possible privacy concerns.
Whenever I discover a useful extension, but see warning messages like “It can read and change all your data on the websites you visit” or “It can read and change your browsing history”, I have no choice but to skip that extension. I simply can’t take the risk of installing any spyware or adware in the name of browser extension. We all have already seen many examples (1, 2) in past, where a popular extension was involved in unethical and malicious activities.
Google Can Reduce The Fear
If you like this idea, please star this issue on Chrome bug tracker (you need to login first).