Mikel Arteta's side suffered their eighth Premier League loss of the season, but few would have been endured with the deficit in quality they showed on Merseyside.
A Rob Holding own goal gave the home side the edge, and while Nicolas Pepe was able to level the match from the penalty spot, Yerry Mina's near-post header from a corner consigned them to a loss.
But who were the chief culprits for the Gunners and who shone for the hosts?
✔️ GOOD PERFORMANCE
Nicolas Pepe: 7.1
Saddled with the tag of a £70 million attacker, much is expected of Nicolas Pepe each time he plays.
On this occasion, he was expected to carry the offence virtually single handed in the surprise absence of Pierre-Emerick Aubameyang due to injury.
Some of his shooting was wayward, but at least he was not invisible, like Willian and Eddie Nketiah, and when he was presented with his one big chance from the penalty spot, he took it.
❌ BAD PERFORMANCE
Rob Holding: 5.7
Fronted up against the in-form Dominic Calvert-Lewin, Holding found himself outmatched.
The forward dominated him in the air and was responsible for forcing the own goal that Holding scored in the first half.
He never got to grips with the forward and his performance will make Gunners fans crave the return of Gabriel to their starting XI.
⭐ STAR MAN
Yerry Mina: 7.6
Powerful and competitive, the Everton centre-back was decisive in this match at both ends of the field. He never gave anything up defensively and was also the match winner thanks to a very astute header that left Bernd Leno foundering.
He won five of this seven duels and made two clearances. Impressively, he lost possession only four times - a match-low for players who featured for the duration.