The privacy watchdog, known as CNIL, has also ordered Google to post the decision on its google.fr homepage for 48 hours within eight days of being officially notified of the ruling.
At issue was the new approach to user data that Google began in March 2012, in which it consolidated its 60 privacy policies into one and started combining data collected on individual users across its services, including YouTube, Gmail and social network Google+.
(Also see: French data watchdog questions Google on privacy)
It gave users no means to opt out.
"The company does not sufficiently inform its users of the conditions in which their personal data are processed, nor of the purposes of this processing," CNIL said in a statement.
A Google France spokesman told Reuters the company will take note of this decision and consider further action.
CNIL said the fine is the highest it has issued until now and is justified by the number and the seriousness of the breaches stated in the case.
But the penalties that France and most other EU countries can impose remain small compared with the $10.7 billion net profit that Google earned in 2012.
Spain can impose fines of up to 1 million euros, while the German Data Protection Act caps penalties at 300,000 euros.
There is no legal framework to levy European-wide fines.
In June, CNIL found Google to be in breach of privacy law on six counts, notably that it posted "insufficient" information for French users about how their private browsing data was collected and used.
© Thomson Reuters 2014