The watchdog said the way Apple implemented its App Tracking Transparency (ATT) software was "neither necessary nor proportionate to the company's stated goal to protect user data" and also penalised third-party publishers.
In addition to the fine, Apple will have to publish the decision on its website for seven days.
Authorities in Germany, Italy, Romania and Poland have opened similar probes over ATT, which Apple promotes as a privacy safeguard.
The fine is the latest by a European regulator against a US tech giant, even as President Donald Trump has threatened to impose tariffs in response to such penalties.
"While we are disappointed with today's decision, the French Competition Authority has not required any specific changes to ATT," Apple said in a statement.
The authority said it was up to the US company to ensure compliance.
The feature, introduced by Apple in 2021, requires apps to obtain user consent through a pop-up window before tracking their activity across other apps and websites.
If they decline, the app loses access to information on that user which enables ad targeting.
Critics have accused Apple of using the system to promote its own advertising services while restricting competitors.
- 'More control over privacy' -
In its decision, France's Competition Authority said the ATT feature leads to an excessive number of consent windows for third-party apps on iPhones and iPads, making the experience more cumbersome.
It also found that Apple's system required users to opt out of ad tracking twice rather than once, "undermining the neutrality of the feature" and causing economic harm to app publishers and ad service providers.
The authority added that Apple's approach disproportionately affects smaller publishers, who rely heavily on third-party data collection to fund their businesses.
Following complaints from advertising industry players who claimed ATT hindered their ability to target users, France's competition watchdog initially declined to impose emergency measures in 2021 but continued its investigation.
"This decision marks an important victory for the 9,000 companies in the online media and advertising ecosystem," said several industry stakeholders, including Alliance Digitale, the Internet Advertising Syndicate, and the Union of Media Consulting and Buying Companies, in a joint statement.
The head of France's Competition Authority, Benoit Coeure, said the 150-million-euro fine seemed "reasonable" and "appropriate to us".
It is a "rather modest sum when you take Apple's revenue into account", he said. Apple's revenue reached close to $400 billion last year.
Apple said on Monday that ATT "gives users more control of their privacy through a required, clear, and easy-to-understand prompt about one thing: tracking.
"That prompt is consistent for all developers, including Apple, and we have received strong support for this feature from consumers, privacy advocates, and data protection authorities around the world," it said.
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