An e-mail campaign suggests that Google intentionally lists a hate site as the first item that comes up when searching under "Jew" or "Jews." While it is true that hate sites do appear when certain search terms are used, their appearance and rank are not controlled by Google. Google employs technology that automatically ranks sites based on a complicated formula called an algorithm. The ranking of Jewwatch and other hate sites is in no way due to a conscious choice by Google, but solely is a result of this automated system of ranking.
When searching under the term "Jew," the top result in Google at the time of this writing is the hate site "Jewwatch." This site is run by Frank Weltner, who also uses the online monikers "Von Goldstein Mohammad" and "Couch Potato." "Jewwatch" has been in existence since 1997. The longevity of ownership, the way articles are posted to it, the links to and from the site, and the structure of the site itself all increase the ranking of "Jewwatch" within the Google formula.
For more information on Google's ranking system, see Google's Our Search.