But if the Vietnamese video game industry is actively harmed by Steam, an American company, using its vast resources to outcompete Vietnamese publishers, then what is your opposition to this that doesn’t encompass a de facto defense of free market capitalism?

Not GP but the article didn't say that Steam outcompeted local developers by "using its vast resources". On the contrary, it alleged that local developers cannot compete on Steam with international developers, because those do not have to apply the local regulations:

Citing it as "an injustice to domestic publishers", Vietnamese studios reportedly say that local game development "will die" if Steam is able to keep releasing games without the same government scrutiny as domestic games.

A somewhat shaky argument considering that the same is true for many other countries applying their own local regulations, which Vietnamese developers do not have to follow.

But anyway, what is my opposition that doesn't encompass a de facto defence of free market capitalism? The damage to the users. What about all the Vietnamese people losing access to Steam's online features, which are arguably necessary nowadays for many games, especially multiplayer ones. And for what? To benefit Vietnamese businesses? Not very socialist of you comrade Vietnam. *smh*

In any case, this is all pure speculation at this point, since both parties have yet to make a statement about the situation:

At the time of writing, there's been no formal word from Vietnamese authorities or Steam about the "ban", [...]

That said, my current head cannon goes something like this:

Vietnamese devs: Dude, these regulations on games are killing us. We can't compete on Steam with games like these.
The Party: Okay we hear you. *bans Steam*
Vietnamese devs: Wait, what? (← we are here)

Edit: formatting