The world really is getting smarter, as the Department of Transportation announced Thursday that it is partnering with Alphabet's Sidewalk Labs, a sister company of Google that is focused on research and development of smart city concepts, to build an analytics platform aimed at making cities smarter.

Together, the Department of Transportation and Sidewalk Labs have launched the Smart City Challenge, a $50 million contest that invites cities across the U.S. to outline a plan on how a city would use automation and other technological innovations.

So far, seven cities have made it into the finals of the competition: Austin, Texas; Columbus, Ohio; Denver, Colo.; Pittsburgh, Penn.; Portland, Ore.; San Francisco, Calif.; and Kansas City, Mo. Each of the finalists was given $100,000 and three months in order to submit their final proposals.

The goal of the project is actually quite simple. It aims to bring cities across the country fully into the connected age. Of course, with the emergence of the Internet of Things, being able to connect with each other is a necessity.

Sidewalk Labs CEO Dan Doctoroff has given a pretty good picture of what innovations would be included in a prototypical smart city.

"Essentially the way this will work is we will build a platform for ingesting lots of different types of data that will enable users to understand the ground truth in real time," he said.

"Data will come from billions of anonymized trips, sensors monitoring traffic and other conditions on the street, data from third party applications, the city's own data, all fed into an analytical engine."

All this connectivity would ultimately benefit cities of the future. By having a city that is fully connected with each other, numerous issues, which include congestion, housing and energy, could very well be aided by smart connectivity. Thus, the smarter the cities get, the more effectively urban problems get addressed.

Apart from winning the $50 million prize, the winner of the Smart City Challenge would also be given more than 100 Wi-Fi kiosks across the city. These kiosks are designed to gather data on numerous urban activities, including pedestrian activities, noise levels and even environmental metrics such as ir pollution.

The winner of the Smart City Challenge is set to be announced in June.