Mo Salah's second half strike condemned us to our first Premier League defeat of the season after Phil Foden's earlier strike had been ruled out following an intervention from the video assistant referee.
Pep Guardiola's men enjoyed 64% of the ball and had 16 shots.
However, our hosts created 13 opportunities themselves - a major point of frustration for Gundogan.
The 31-year-old pointed out Salah's chance early in the second period, which was well saved by Ederson, as a warning sign that City did not heed.
"We’re obviously disappointed," he said after the match.
"We gave a couple of easy chances away and gave them easy possibilities to score. We were a bit fortunate in the first situation with Mo Salah and then the second one he converted."
Despite the result, the Germany international feels the game lived up to expectations in terms of entertainment value.
"These are the two best English teams and maybe the best teams in Europe of the last few years," he insisted.
"Of course it was going to be intense and aggressive, also with the crowd here. Everyone knows it’s going to be a really good game but unfortunately it was the worst result for us."