Manchester city are just lacking the present of de bruyne because he is an exceptional midfielder and he just makes the difference in the team and his presence makes the whole team a totally different team and Manchester city I think it's just suffering from the de bruyne effect. But the loss against arsenal is actually exceptional because this gunners team have really stepped up their game and if they can continue like this they would definitely make a difference in the title decided.
Kevin De Bruyne's absence was not the cause of Manchester City's defeat because a narrow defeat like that can be experienced by any team when the match is almost over and if you remember last season they also lost to Liverpool with the same score as when they lost to Arsenal, so in my opinion this is really wasn't because of Kevin De Bruyne's absence but they were a little careless and Arsenal took advantage of that.
This defeat looks painful because it happened to their strong competitor and is a consecutive defeat this season, but that does not mean they are out of the competition from the title race because anything is still possible in the next matches, and Arsenal should not be careless like what happened last season so they failed to win champion title.