The Spanish coach made seven changes from Monday's 3-0 victory over Newcastle at St Mary's Stadium, with the thought that Arsenal face Ralph Hasenhuttl’s men once again in the Premier League on Tuesday.
The likes of Bukayo Saka, Thomas Partey and France striker Alexandre Lacazette were dropped to the bench, while Emile Smith Rowe and Kieran Tierney were rested completely and forward Pierre-Emerick Aubameyang missed out with a personal issue.
The Gunners went down by an own goal from defender Gabriel Magalhaes in the first half and that was enough to send the North Londoners packing as the fringe players failed to impress.
Merson has blamed Arteta for his former side’s early exit from the competition, insisting the coach should have prioritized defending the FA Cup.
"I don't know what he's doing," he said on Soccer Saturday.
"They are not going to win the league. They are not going to get into the top four, I wouldn't have thought, unless they go on one of the best runs in the history of the Premier League.
"For me, this is the [competition] that made Arteta last time around. He came to Arsenal and had a great semi-final and a great final.
"Honestly, I cannot believe it. This was a more important game than the midweek league game, in my opinion. They are not getting relegated and they are not getting in the top four.
"You do not really want to end up getting sixth or whatever again because then you are playing in the Europa on Thursdays and that just sets you back.
"So, for me, it was a bad decision."
