MOUNTAIN VIEW, Calif. — When trying to get somewhere you can program it into a GPS and have Siri direct you around town. However, now a paradox has emerged, technology companies know a lot more about a city’s traffic patterns than the city officials trying to solve the problem.

On Thursday, the federal Department of Transportation announced a partnership with Sidewalk Labs, a unit of Alphabet, the same technology conglomerate that owns Google, that aims to funnel transit data to city officials in hopes of making traffic more bearable and figuring out newer, smarter ways of moving people and goods around the country’s urban areas.

The announcement is part of an continuing “Smart City” competition in which the Transportation Department is dangling $40 million in grant money in front of cities to prod them into using more technology. As part of the deal, Sidewalk will work with seven finalists to develop a traffic management system that will be one of the company’s core software products.

“We’re taking everything from anonymized smartphone data from billions of miles of trips, sensor data, and bringing that into a platform that will give both the public and private parties and government the capacity to actually understand the data in ways they haven’t before,” said Daniel L. Doctoroff, Sidewalk’s chief executive, who is a former deputy mayor of New York City and former chief executive of Bloomberg.

Sidewalk was hatched out of Google last June as an independent company that will use technology to solve urban problems — yet another example of how the Internet giant has strayed far and wide from its initial mission in online search. The company is based in New York and was conceived by Mr. Doctoroff, along with a team of Google employees led by Larry Page, one of Google’s founders and now Alphabet’s chief executive.

In June, Sidewalk announced that it would help finance a company called Intersection that is installing thousands of Wi-Fi kiosks across New York City, but the company has otherwise said little about its aspirations or what kinds of technologies it might develop.

Thursday’s announcement gave some insights. As part of the Transportation Department competition, Sidewalk will work with the seven finalists to develop a software platform called Flow to help cities diagnose and fix congestion problems.

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