Keane laid into his former side, picking out Bruno Fernandes, Luke Shaw, Fred, Scott McTominay and Dean Henderson for criticism following their defeat on Thursday.
"United were all over the place, really poor performance from them, poor mentality," Keane said of his old side's performance on Sky Sports. "Ole [Gunnar Solskjaer] looks a bit shell-shocked there. It's been a tough few days.
"The performance tonight was nowhere near good enough. All United's shortcomings have been shown up in the last couple of days.
"Tonight just not enough quality, giving such bad goals away but the other worry, Liverpool could have scored six or seven.
"We have praised United the last few months but this squad is so short of competing with Man City to win the title, all their shortcomings have been shown up the last few days.
"I think Man City are so far ahead of this United squad it is scary. Ole will think they need three or four big players to come in at least."
Keane also declared: "I don't want to be critical to Fernandes but he spent half the night crying on the pitch. United players were looking for Liverpool to kick the ball out of play but you only stop with a head injury.
"I look at the two midfielders, [Scott] McTominay is a good honest player, they have got Fred. As long as those two players are playing in midfield for Manchester United they will not be winning any big trophies.
"Okay they are in the Europa league final but they are only in that final because they came up short in the Champions League. Let's not be kidded on by that either.
"The last few days, I can't believe how short Man United are. They are chasing the game, they need a goal and they bring [Nemanja] Matic on and not Donny van de Beek."
Keane also expressed concerns that Henderson 'looks tiny' between the sticks.
"He looked so small in the goal," Keane added. "That is my worry for Henderson, good mentality, good temperament, good with his feet, but I have seen a few goals go in recently where he looked so small in the goal and he looked tiny there for the fourth goal.
"He needs to be given a run of games but tonight he might think it's not my best night but you've got to give him a run of games. They cant go back to De Gea, I don't think he is the answer either. My worry is his presence, he looks so small which is a big concern going forward."