Wenger opted to leave £50m striker Alexandre Lacazette on the bench for the crunch clash and include Francis Coquelin in a midfield three - a decision he effectively admitted as being the wrong one when he hauled him off for the former Lyon man early in the second half.
"I am disappointed. You can accept if it City win in a normal way, they are a good side, but the way it happened is unacceptable".
Kevin De Bruyne opened the scoring inside 20 minutes before Sergio Aguero converted the second-half penalty. I am very upset because at 2-1 we were in the game and looked like we could score. We had two offside goals against us a year ago [at the Etihad].
He also referred to Arsenal's trip to Man City last season, where two controversial goals handed City a 2-1 victory.
Taking issue with refereeing decisions and criticism from pundits is nothing new, but if Wenger can't address the problems his side are evidently facing, the Gunners will only struggle even more.
"We had an extra attacking player going forward but at the end of the day we set up very well to play against City and we were just unfortunate", he told Arsenal.com.
His outburst angered Shearer, though, the Newcastle United legend calling on Wenger to apologise to the England worldwide.
Arsenal was trailing 2-1 at the time and strong enough to get a point on the day were it to manage an equalizer.
"In a hard moment of the game he did very well", Wenger said. "It's one thing to deflect from his own team's inadequacies and deficiencies, it's another one to question someone's integrity and be wrong". Wenger did not explain why our expensive Frenchman was on the bench, but he did thinks Alexis had a good game as striker.
But Wenger said: "I believe it was no penalty".
Opposite number Pep Guardiola rebuffed Wenger's complaints by referring to the Gunners' contentious win at Burnley last season.
He said: "We won in the best way and we deserved (it) by far, (for) he chances we created and the few chances we conceded".
"The fact that you tell me it's an offside goal shows enough".