Should Google be held legally responsible for its content?

The Italian courts seem to think so.

A public prosecutor in Milan decided to indict four Google employees;
David Drummond,
Arvind Desikan,
Peter Fleischer and
George Reyes (who left the company in 2008).

After a video of students, at a school in Italy, bullying an autistic schoolmate was uploaded to Google Video in 2006.

The charges brought against them were criminal defamation and a failure to comply with the Italian privacy code.

In response a Google spokes person said that the charges were ridicules and that 'none of the four Googlers charged had anything to do with the video. They did not appear in it, film it, upload it or review it. None of them know the people involved or were even aware of the video's existence until after it was removed.'

Nevertheless, a judge in Milan convicted 3 of the 4 defendants;

David Drummond,
Peter Fleischer and
George Reyes

For failure to comply with the Italian privacy code. However all 4 were found not guilty of criminal defamation.

There has been public outrage regarding the ruling with fears that employees of hosting platforms, like Google Video, could be criminally responsible for the content that users upload. In addition people have argued, including Google itself, that the conviction goes even further and attacks the principles of freedom on which the internet is built as under European law hosting providers are safeguarded from liability so long as they remove illegal content once they are notified of its existence. If this principle is overruled then sites such as Blogger, YouTube etc could be held responsible for vetting every piece of content uploaded to them, e.g. every piece of text, every photo, every file, every video. It is feared that if this is the case then the modern day Web will cease to exist, and the many benefits it brings such as economic, social, political and technological could disappear.

In response to the courts ruling Google has stated that they will appeal the 'astonishing decision because the Google employees on trial had nothing to do with the video in question .... and it is outrageous that they have been subjected to a trial at all.'

So the question is; Are the Italian courts right? Should sites such as Google be legally or morally responsible for the content uploaded onto their sites?