The goal is to help better design transportation infrastructure to suit a city's needs.
The platform, called Flow, will rely on one of Alphabet's core strengths: collecting, analyzing and visualizing vast amounts of data.
The system will help cities identify congestion and areas that are underserved by public transportation, enabling planners to come up with a better citywide plan that uses current and new forms of transportation, like ridesharing, Sidewalk says. That's getting more important as commute times and distances grow longer.
"To overcome these challenges, cities must find ways to foster the emergence of technologies that have the potential to transform transportation and people's lives," said Transportation Secretary Anthony Foxx.
The system will draw on data containing billions of miles of trips from Google's Urban Mobility project.
In announcing the plan, Dan Doctoroff, CEO of Sidewalk Labs, quickly sought to head off any criticism that the system will give Alphabet and Google a deeper insight into the private lives of millions of users. The data will be "aggregated and anonymized," he said.
Flow is "best described as a transportation coordination platform that will bring in all sorts of different data from the street,” he said. It will also send messages to city officials, drivers, and others to help better share roads.
Cities will be able to use Flow to examine the types of trips being taken and the neighborhoods that contribute most to traffic problems.
Alphabet, through its Google Auto unit, is aggressively developing self-driving car technology, and executive Eric Schmidt has talked about a future when such vehicles could drive people to work and then spend the rest of the day providing rides to others rather than sitting in a parking lot.
Companies like Ford are investing in car sharing schemes to reduce the number of vehicles on city streets, and both Lyft and Uber have carpool options in their apps.
The new platform will be developed with seven cities that are finalists in the DOT's Smart City Challenge project and will eventually be installed in the winning city.
The seven cities are Columbus, Ohio; Kansas City, Missouri; Pittsburgh; Denver; Portland, Oregon; San Francisco; and Austin, Texas.