Square, Enix and Namco announced back in April about a stock-purchasing agreement, and potential future plans. However, nothing beyond this was revealed, until now.
Square of Japan posted their initial plans, and game site Video Senki translated it.
The main focus of the three companies will be in online gaming. While Square already has PlayOnline, a separate company will be formed (owned by all three) to handle all of the aspects of PlayOnline.
Possibly the most interesting details divulged were the prospect of an online RPG developed by both Square and Enix, and some form of cooperative arcade game development (networked Final Fantasy anyone?).
Finally, the three companies will also work together on other things, such as distribution and localization. They'll also be working on cell phone development tools, but since games on cell phones aren't anywhere near as popular in the US (do we even have them at all?) as Japan, this probably won't be affecting American gamers at all.