This is the exact sort of thing anti-monopoly laws are intended to work against: that a major market force in one market uses that power to intrude or support itself in another market. Since Google Chrome undoubtedly has a sufficiently large market share that this may be a concern and the removal of this extension certainly affects the advertisement market, this seems like a very dangerous move for Google.
Yes, it may be considered “self-defense” but is the cost incurred really so large that they want to risk another lawsuit?
I switched to FireFox long ago.
That's actually not true. There's some case law about that sort of thing (the Microsoft antitrust case being the most famous), but the basis for anti trust law has always been about price efficiency, not protection of competition for competition's sake (c.f. the Microsoft breakup was overturned), nor consumer benefit.