First, the risks of investor lawsuits loom. By listing in the U.S., Alibaba exposes itself to class-action lawsuits from investors since Hong Kong lacks a class-action mechanism. A suit filed in 2004 by U.S. shareholders against giant China Life Insurance Co. over its alleged failure to disclose sensitive information--including a government audit--alerted many Chinese companies to U.S. litigation risk, although those claims ultimately were dismissed by courts in 2008. China Life, the country's largest insurer, listed in both the U.S. and Hong Kong in 2003.

Second, Alibaba's listing implies the need to turn over books containing valuable data on the Chinese economy to U.S. regulators. That might make Chinese officials uneasy.

'There's a lot of what China might consider to be state secrets inside of Alibaba,' said Paul Gillis, a professor of accounting at Peking University. 'Giving U.S. regulators access to that information is something that I think China doesn't really relish.'

Third, Alibaba faces uncertainty from an ongoing battle between the Securities and Exchange Commission and PRC affiliates of the Big Four accounting firms. The SEC has demanded access to working papers from the Big Four affiliates, which they say they cannot provide without violating Chinese law. In January, an SEC administrative judge suspended the PRC affiliates from auditing U.S-traded clients for six months, a decision the firms have appealed. Alibaba is insulated from the immediate suit; it says its principal auditor is PricewaterhouseCoopers Hong Kong, which is unaffected by the ruling. But sources previously have told Moneybeat that issues surrounding Chinese secrecy laws might also apply in some cases to Hong Kong auditors, leaving them vulnerable to SEC sanction in the future.

And lastly, while a favorite venue of Chinese tech firms, the U.S. remains an unfamiliar market. Hong Kong has a larger investor base that understands--and is willing to invest in--Chinese companies. Alibaba Executive Vice Chairman Joe Tsai has written on Alibaba's corporate blog that since most of Alibaba's business is in China, 'it was natural for Hong Kong to be our first choice.' In an emailed statement, the Hong Kong Exchange echoed that sentiment, noting that HKEx has been 'the leading offshore capital formation centre for companies from Mainland China' for the past 20 years.

In fact, Alibaba rival, Tencent Holdings Ltd, is up roughly 10% since the beginning of 2014 in Hong Kong and has surged nearly 700% since it raised around US$200 million in its 2004 IPO. It now has a market capitalization of roughly US$140 billion. Meanwhile, Baidu, Inc., China's leading search engine and another internet rival of Alibaba's, is down 9% year to date. It hasn't done badly however, a reflection of the huge investor base in the U.S. covering fast-growing Chinese tech companies: Since its roughly US$4 billion IPO, Baidu is now worth US$56.63 billion.

Ironically, Alibaba may be exempt from the burden most companies associate with a U.S. listing--onerous requirements on disclosures and transparency. Foreign issuers are exempt from some of the stricter reporting requirements under the U.S.'s landmark Sarbanes-Oxley Act. Hong Kong, meanwhile, has more burdensome barriers for entry for companies using variable interest entity structures, or VIEs, which allow Chinese companies in industries where foreign ownership is restricted-web companies, for example-to list on overseas exchanges, according to Antony Dapiran, a partner at Davis Polk. Under VIE structures, the offshore listed company owns a Chinese shell company which contracts with the underlying Chinese firm to receive all its profits. Because the arrangement relies on contracts, if a company fails, foreign investors don't have much access to the underlying company's assets in China. Compared to Hong Kong, U.S. VIE regulation is light.

'In a way the U.S. is less burdensome than Hong Kong for a company like Alibaba,' said Mr. Dapiran. The VIE structure already worked to Alibaba's advantage in 2012, when Alibaba founder Jack Ma transferred the contractual assets of Alipay, Alibaba's online payment system, to a private company he controlled-over the protests of Alibaba investor Yahoo.