There was some big market-share news for Baidu (BIDU 1.13%) on two fronts last week. The good news is that it's rocking in the realm of video. The bad news is that Qihoo 360 (QIHU.DL) is starting to catch up in its stronghold of search.

An updated report from Chinese traffic tracker iResearch shows that Baidu's Iqiyi drew 94 million active users in March. That topples what is now the former market leader, Youku (NYSE: YOKU), which attracted 83.5 million unique users during the same month. 

This would probably be a bigger feat if video was actually lucrative in its current form. Youku's been posting narrowing deficits, but it's not expected to turn a profit until next year at the earliest. Baidu's success in streaming video and other non-search areas has helped diversify Baidu's operations, but it has come at the expense of overall margins. Revenue soared 43% to $5.3 billion last year, but earnings growth clocked in flat. The contraction of margins should continue in 2014, with revenue once again outpacing bottom-line growth. Analysts see revenue growth accelerating to 47% this year, but those same pros see a mere 9% advance in earnings per share.

Baidu's investments in online video, mobile app marketplaces, and online travel are playing a major role in expanding revenue at the expense of near-term profitability. However, it may also be masking Baidu's fading appeal as the country's search engine of choice. 

Chinese research firm CNZZ is reporting that Qihoo 360's search engine -- a platform that didn't even exist until two summers ago -- is now handling roughly 25% of the country's Web search queries. The data detailing January shows Baidu's market share slipping to 58%. This is a pretty big deal since Baidu was attracting as much as three-quarters of China's search traffic at its market share peak a couple of years ago. 

This is naturally a trend worth watching, but it's not as problematic as you may think. China's search market is exploding, so Baidu is still growing at a healthy clip. Its slice is shrinking, but the pie itself is expanding at a faster rate. Online marketing revenue soared 51% in Baidu's latest quarter. Its list of contacts is getting thicker. It had 451,000 active online marketing customers during the period, 11% more than it had a year earlier. Perhaps more importantly, the average marketing customer is spending 35% more on Baidu than it did a year earlier. In other words, Qihoo 360's success hasn't held them back from making Baidu a more important component of their online marketing strategies. If anything, Baidu's success in video and other online areas will make it that much harder to for marketers outgrow the dot-com darling. 

Investors should still keep an eye on both the online video and Web search markets. The heady pace of smartphone migration in China is rapidly expanding demand for streaming video and search queries. Baidu no longer has to be gaining market share ground on all turfs, as long as the sum of its parts continues to impress.