Van Gaal felt the thrill-a-minute clash at the Etihad illustrated the weaknesses that Pep Guardiola has to address.
He told the Mirror: “The match proved to me that City cannot defend.
“When Liverpool equalised, there were enough City defenders around the box to prevent it.
“But most of the time, in the Premier League, City don't have to defend because they outplay most opponents.
“When they face a strong side like Liverpool, you can see that the City players are not able to defend properly. They look erratic.
“Liverpool deserve applause because most teams cannot force Man City into a situation where they have to defend.
“Liverpool did push them at one point in the second half and then we could see that City were in trouble. Just look at Roberto Firmino, he hardly touched the ball, but his amount of running for the team was incredible.
“Klopp also has Sadio Mane and even Mo Salah running their socks off in all matches.
“Those three help the others to defend and they also have the energy to counter-attack and create things when they win the ball back."