
The Google Italy employees were accused of breaking Italian law by allowing the video to be posted online.
Judge Oscar Magi absolved the three of defamation but convicted them of privacy violations.
The three received suspended six-month sentences, while a fourth defendant was acquitted.
The verdict is likely to have ramifications for content providers around the globe
Google said that it considered the trial to be a threat to freedom on the internet and that pre-screening all YouTube content was impossible.
The video at the centre of the trial was posted on Google Video in 2006 shortly before the firm acquired YouTube.
Prosecutors argued that Google broke Italian privacy law by not seeking the consent of all the parties involved before allowing it to go online.
Google's lawyers said that the video was removed as soon as it was brought to its attention and that the firm also provided information on who posted it.
As a result four students were expelled from their school in Turin, northern Italy.