It was a dismal afternoon for the 'Gunners' as they suffered a 3-0 defeat in the final of the Carabao Cup to concede Manchester City their first piece of silverware for the season.
Without mustering a reply, Arsene Wenger's side went down to goals from Sergio Aguero, Vincent Kompany and David Silva, and it was the 'Sky Blues' first which especially riled the former Manchester United defender.
Pep Guardiola's team took the lead in the first half when a Claudio Bravo goal-kick found Aguero, who proceeded to lob opposition keeper David Ospina after overpowering Mustafi near the halfway line.
The Arsenal defender was nudged by the Argentine striker during the build-up and instead of continuing to chase back and defend his goal, Mustafi appealed for a free-kick in vain, much to Neville's annoyance.
Speaking to 'Sky Sports' during the interval, the former United player said: "Mustafi has to be stronger than that. That is pathetic defending".
"That is really bad from Mustafi and I think Ospina makes Aguero's mind up for him [by coming off his line]. But for a centre-back to claim that as a foul is absolutely terrible defending. It's woeful from [him]".
He concluded: "I'm not having that as a foul. It's just really bad. It's schoolboy stuff. It really is just shocking defending in all forms of football".