Of course it does and can deny it - isn't a user forced to grant the permission when installing the app?
IMHO Google is to stop abuses like this on the Android OS level by means of allowing users to deny any particular permission an app demands and still install the app, encouraging users to grant/deny every particular permission consciously and forcing the app authors to handle denial of any particular permission gracefully without crashes and without denying to function (but in the cases when it is absolutely physically impossible to fulfill the function the user invokes without the missing permission).
Both Google and Apple should provide "middle" controls. Even if I grant the app "access" to my contacts, I want to be able to select "which" contacts and which fields.
E.g. if I use whatsapp for 3 people out of my 100 contacts saved in my phone, I want to be able to give to whatsapp only the access to the phones of these 3 contacts. Others should be invisible for whatsapp, if I want so.
And they should not get the addresses, birth dates and my notices about even these 3 contacts. They should not be able to see them, unless I explicitly want to allow.
I know, users are lazy, but at least the fine grained control and white-listing should be an option. Now it's all or nothing.
There are rooted utilities that do this, or allow you to spew fake data at those apps. That is, if you could unlock your bootloader and install the software you want.
You should really blame phone manufacturers/carriers and Congress for giving you the privilege of paying for a piece of locked hardware that you don't own. They're only loaning you a billboard, after all, so what do you expect? Personally I wouldn't put any important information on a locked device, nor do I ever acquire unlockable devices. People have lost their minds giving up all of the most important electronic freedoms that form the backbone of the future.
As far as I know the selection of officially unlockable phones is extremely humble. Unlocking a phone usually means using hacks voiding warranty and/or violating licenses. I absolutely support the people choosing to go this way morally (and am one of them myself) yet I think it's sad that people are forced to do illegal-ish hackery to configure their phones a reasonable way and protect their privacy. I have also heard about a man that was put in prison for hacking his nintendo so the whole thing gets scarier and scarier.
IMHO Google is to stop abuses like this on the Android OS level by means of allowing users to deny any particular permission an app demands and still install the app, encouraging users to grant/deny every particular permission consciously and forcing the app authors to handle denial of any particular permission gracefully without crashes and without denying to function (but in the cases when it is absolutely physically impossible to fulfill the function the user invokes without the missing permission).