Arteta, City's assistant manager, added: "We have had this type of crowd in the Champions League before and we were able to win the game".
The Spaniard - who conducted Tuesday's pre-match press conference ahead of facing Lyon in the Champions League due to Guardiola's touchline ban - was one of the favourites to succeed Arsene Wenger at the Emirates. "We missed the right pass and didn't find consistency. A new competition and we know how hard it is to play against the teams in Europe".
The 36-year-old said: "I am surprised when you have a team that won it three times in a row but that means we are doing things really well".
"Even if they have lost Cristiano Ronaldo, I'd still make Real Madrid the main favourites due to their history and experience".
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He added: 'If you ask me in the future will I be a coach the answer will be yes, but I am really happy where I am. There were a few nervy moments late on but they were worth winners from there on, leaving Manchester City to deal with a harsh reality check.
Arteta would not be drawn on whether Guardiola's absence had an impact, saying: "I have no idea. I don't think that's an excuse though".
"It is a good challenge, a very nice challenge, but if I had to choose, I would choose Pep on the touchline, because he does that job better than anyone else".
"Exactly the same as normal, the only difference is Pep isn't allowed to be with us today".
Although Guardiola's role will be heavily restricted on Wednesday, Arteta confirmed that City's build-up to their Group F opener had been no different than usual.