Google said it was "delighted" with the appellate ruling that cleared the executives and removed uncertainty in Italy over the Internet giant's business model.
The original verdict raised alarms that Web-based platforms could be forced to police their content in Italy and perhaps beyond, while putting European privacy concerns at odds with the freewheeling nature of the Internet.
A lower court in 2010 convicted the three of privacy violations for a 2006 video posted on Google Video, a video-sharing service Google ran before the company acquired YouTube later that year.
None of the executives charged in the case were in any way involved in the creation or posting of the video and Google said they took it down within two hours of being notified by authorities.
Google, in its final arguments before the court, noted 72 hours of video is posted on YouTube every minute - a quantity that would be impossible to preview. That has multiplied from 20 hours of video a minute at the time of the initial verdict.
The appellate ruling throws out the convictions and six-month suspended sentences against Google's global privacy counsel Peter Fleischer, its senior vice president and chief legal officer David Drummond and retired chief financial officer George Reyes.
"We're very happy that the verdict has been reversed and our colleagues' names have been cleared," Giorgia Abeltino, policy manager at Google Italy said in a statement. "Of course, while we are delighted with the appeal, our thoughts continue to be with the family, who have been through the ordeal."
Initially the three executives, along with a fourth, had been charged also with defamation. All four were cleared of that charge in the first trial.
Google and other hosting platforms generally rely on other users flagging objectionable content.
Marco Camisani Calzolari, an Internet entrepreneur, said the ruling only confirmed that "the platform is not responsible for content, of course."
Calzolari runs a platform called www.livepetitions.com, currently active in nine countries with 20,000 new users a day, where he faces similar issues. The five-year-old site allows users to collect signatures on petitions, which can be the source of acrimony and controversy.
"We do not filter in advance," he said, adding that he will remove items on request when it is clear it is in some way illegal or offensive.
The footage in the Google case showed an autistic student in Turin being pushed, pummeled with objects, including a pack of tissues, and insulted by classmates, who called him a "mongoloid."
The prosecutor's in their case - which was based on a complaint by an advocacy group - emphasized that the video had been viewed 5,500 times over the two months it was online and had elicited more than 80 comments, including users urging its removal.
Google argued that it was unaware of the offensive material and acted swiftly to remove it after being notified by authorities.