This paper explores the extent to which diffusing Internet technology products is a function of the competitive actions of local online vendors and their respective multinational challengers in emerging electronic markets. Drawing on the perspectives of competitive technology diffusion and Austrian firms’ market process, we developed a set of hypothesis concerning the characteristics of competitive actions that local vendors implemented and the impact of these actions on the dominance of Internet technology products in electronic markets. We then validate the model with longitudinal field data from two pairs of Internet technology products in the search engine and consumer-to-consumer (C2C) electronic market. Our findings suggest that diffusing Internet products can be predicted by the dynamics of specific market-oriented actions. Such a pattern supports the conclusion that local online vendors have significant local advantage in fast-growing emerging markets. We also examine the policy implications of our results, especially with respect to how competitive action can help local online vendors defend their turf against multinational incursion.