Yahoo only owns 34.8 percent of Yahoo Japan. SoftBank, Japan's largest distributor of computer, software, peripherals and systems, as well as Japan's largest publisher of computer-related computer magazines and books, owns 38.6 percent, giving it majority control. Financial terms of the four-year, non-exclusive partnership were not disclosed.

"At the present time, we feel there are quite a few areas where Microsoft is not yet ready," said Yahoo Japan CEO Masahiro Inoue at a Tuesday press conference in Tokyo. "Google is one step ahead in Japanese-language services."

Google: The Better Choice?

Yahoo Japan has long partnered with Google. In 2001, Google announced its first alliance with Yahoo Japan to give Japanese users access to Google's search results. Yahoo Japan was then, and is now, one of the most visited web sites in Asia, and the partnership opens the door to more opportunity for Google.

Google owns 37.3 percent of Japan's search market, according to Net Ratings. But Yahoo Japan leads with 53.2 percent. Microsoft's MSN and Bing have grabbed a collective 2.6 percent. That's somewhat of a role reversal from the U.S. market, where Google has a dominant 85 percent, compared with only 6.2 percent for Yahoo.

"From the outside it's a surprise, but when you consider that Yahoo only owns a minority stake in the entity, it's less so. Its majority owned by SoftBank," said Greg Sterling, principal analyst at Sterling Market Intelligence. SoftBank also owns shares in Alibaba Group, which runs Yahoo's China portal.

"Yahoo Japan made a business decision that Google was a better choice," Sterling said. "Now the question is whether Microsoft and Yahoo will seek to block the deal with Japanese regulators."

No Opposition Expected

Yahoo Japan said it discussed the deal with Japan's Fair Trade Commission before announcing it publicly. The government reportedly had no objections. Google's technology also underpins AOL's search engine in Japan and globally.

Daniel Alegre, Google's vice president for Asia Pacific and Japan, said the two companies "will remain independent search and advertising providers, will not share any customer or pricing information, and will continue to vigorously compete in Japan."

Alegre also said Yahoo Japan will be able to customize Google's search service for its users -- including how users see and experience search on Yahoo Japan. As a result, he said, users should continue to expect a unique experience on Yahoo Japan versus when they are on Google.