How the tiny Caribbean island of Anguilla has turned the AI boom into a digital gold mine

The artificial intelligence boom has benefited chatbot makers, computer scientists and Nvidia investors. It's also providing an unusual windfall for Anguilla, a tiny island in the Caribbean.

ChatGPT's debut nearly two years ago heralded the dawn of the AI age and kicked off a digital gold rush as companies scrambled to stake their own claims by acquiring websites that end in .ai.

That's where Anguilla comes in. The British territory was allotted control of the .ai internet address in the 1990s. It was one of hundreds of obscure top-level domains assigned to individual countries and territories based on their names. While the domains are supposed to indicate a website has a link to a particular region or language, it's not always a requirement.

Google uses google.ai to showcase its artificial intelligence services while Elon Musk uses x.ai as the homepage for his Grok AI chatbot. Startups like AI search engine Perplexity have also snapped up .ai web addresses, redirecting users from the .com version.

Anguilla's earnings from web domain registration fees quadrupled last year to $32 million, fueled by the surging interest in AI. The income now accounts for about 20% of Anguilla's total government revenue. Before the AI boom, it hovered at around 5%.

Anguilla’s government, which uses the gov.ai home page, collects a fee every time a .ai web address is renewed, Identity Digital Chief Strategy Officer Ram Mohan said the fee — $140 for two years — won’t change. It also gets paid when new addresses are registered and expired ones are sold off. Some sites have fetched tens of thousands of dollars.

The money directly boosts the economy of Anguilla, which is just 35 square miles (91 square kilometers) and has a population of about 16,000. Blessed with coral reefs, clear waters and palm-fringed white sand beaches, the island is a haven for uber-wealthy tourists. Still, many residents are underprivileged and tourism has been battered by the pandemic and, before that, a powerful hurricane.

Anguilla doesn't have its own AI industry though Premier Ellis Webster hopes that one day it will become an hub for the technology. He said it was just luck that it was Anguilla, and not nearby Antigua, that was assigned the .ai domain in 1995 because both places had those letters in their names.

Webster said the money takes the pressure off government finances and helps fund key projects, but cautioned that “we can’t rely on it solely."

“You can’t predict how long this is going to last,” Webster said in an interview with the AP. “And so I don’t want to have our economy and our country and all our programs just based on this. And then all of a sudden there’s a new fad comes up in the next year or two, and then we are left now having to make significant expenditure cuts, removing programs.”

To help keep up with the explosive growth in domain registrations, Anguilla said Tuesday it's signing a deal with a U.S.-based domain management company, Identity Digital, to help manage the effort. They said the agreement will mean more revenue for the government while improving the resilience and security of the web addresses.

Identity Digital, which also manages Australia's .au domain, expects to migrate all .ai domain services to its systems by the start of next year, Mohan said in an interview.

A local software entrepreneur had previously helped Anguilla set up its registry system decades earlier.

There are now more than 533,000 .ai web domains, an increase of more than 10-fold since 2018. The International Monetary Fund said in a May report that the earnings will help diversify the economy, “thus making it more resilient to external shocks.

Webster expects domain-related revenues to rise further, and could even double this year from last year's $32 million.

He said the money will finance the airport's expansion, free medical care for senior citizens and completion of a vocational technology training center at Anguilla's high school.

The income also provides “budget support” for other projects the government is eyeing, such as a national development fund it could quickly tap for hurricane recovery efforts. The island normally relies on assistance from its administrative power, Britain, which comes with conditions, Webster said.

Mohan said working with Identity Digital will also defend against cyber crooks trying to take advantage of the hype around artificial intelligence.

He cited the example of Tokelau, an island in the Pacific Ocean, whose .tk addresses became notoriously associated with spam and phishing after outsourcing its registry services.

“We worry about bad actors taking something, sticking a .ai to it, and then making it sound like they are much bigger or much better than what they really are," Mohan said, adding that the company's technology will quickly take down shady sites.

Another benefit is .AI websites will no longer need to connect to the government’s digital infrastructure through a single internet cable to the island, which leaves them vulnerable to digital bottlenecks or physical disruptions.

Now they’ll use the company’s servers distributed globally, which means it will be faster to access them because they’ll be closer to users.

“It goes from milliseconds to microseconds,” Mohan said.