A Milan court has convicted three Google executives for the 2006 transmission of a video showing the bullying of a youth with Down's syndrome.
Google said it plans to appeal the six-month jail terms given to senior vice-president and chief legal officer David Drummond, former Google Italy board member George De Los Reyes and global privacy counsel Peter Fleischer.
Judge Oscar Magi acquitted Google's senior product marketing manager, Arvind Desikan.
"A company's rights cannot prevail over a person's dignity. This sentence sends a clear signal," public prosecutor Alfredo Robledo told reporters outside the Milan courthouse.
The complaint was brought by an Italian advocacy group for people with Down's syndrome, Vivi Down, and the boy's father, after four classmates at a Turin school uploaded a clip to Google Video showing them bullying the boy.
Down's syndrome is the most common genetic cause of mental retardation, occurring in about 1 out of 700 live births.
The case could have ramifications for content providers around the world.
The video was filmed with a mobile phone and posted on the site in September 2006. Google argued that it removed the video immediately after being notified and co-operated with Italian authorities to help identify the bullies and bring them to justice.
It said that, as hosting platforms that do not create their own content, Google Video, YouTube and Facebook cannot be held responsible for content that others upload, comparing the case to prosecuting the postal system for hate letters sent by mail.
But the prosecutors accused Google of negligence, saying the video remained online for two months even though some web users had already posted comments asking for it to be taken down.
Censoring of web sites has become a hot issue in Italy in recent months, following a spate of hate sites against officials including Prime Minister Silvio Berlusconi.
The government briefly studied plans to black out Internet hate sites after fan pages emerged praising an attack on the premier, but the idea was dropped after executives from Facebook, Google and Microsoft agreed to a shared code of conduct rather than legislation.