Milan's main weakness is their defense. And I don't think they'll improve their defense any time soon. AC Milan have dropped points in all three of their matches due to poor defence. The team conceded 6 goals in 3 matches and managed to score 5 goals. Another important point is that Milan's opponents were not very strong in these three matches. Even so, Milan conceded 6 goals.
Milan's opponents in the Champions League, Liverpool, are very strong. And Liverpool have plenty of talented players in their midfield and forward lineup. The players are also in good form now. Liverpool will not find it difficult to break down Milan's weak defence. For these reasons I think Milan have no chance of winning against Liverpool. However, football is always unpredictable. Favorite teams are not always able to win. But I would say it is unlikely to happen in this match.
Considering transfer window is closed, they are not going to cover their defense at all, it's done and they are going to be forced to play with this one. It's clear that they are not going to do well in the UCL, it was known even before they started doing anything honesty, we knew that it wouldn't happen. Milan is not good even in Serie A, let alone be good at UCL, so they will probably either fail at group stages, or they will fail one step above when they face a real opponent, it's clear what they are going to do.
Liverpool on the other hand looks like a team that is doing insanely well with the new manager, it was a good decision to get Arne slot, he is one of those managers that actually does something for the team whenever he arrives to a new team. Look at their results so far, I am sure that if they keep this up, there is a chance that they could be a threat to win both premier league and UCL, doesn't mean they will, but they will compete for both of them.