Arteta is currently part of Pep Guardiola's coaching staff at Manchester City and reportedly has been linked with the vacant manager's job at the Emirates Stadium.
However, in his Sky Sports column, Merson has expressed doubts about Arteta taking control in north London.
"This is a big, big gamble putting someone that has never managed before in charge of a club the size of Arsenal.
"It's all well and good saying he's worked under Pep Guardiola, but let's be honest, Guardiola would struggle managing this Arsenal team. Guardiola and Jurgen Klopp would struggle!
"You're only as good as your players at the end of the day and the idea of Arteta replicating Guardiola's style of football at the Emirates just falls apart when you look at the players he'll be working with."
According to Sky Sports' Kaveh Solhekol, Arsenal chief executive Vinai Venkatesham and the club's lawyer Huss Fahmy were photographed leaving Arteta's home after Manchester City won 3-0 at the Gunners in the Premier League on Sunday. The Arsenal officials reportedly left in the early hours of Monday morning but were captured on camera.
The 37-year-old played for Arsenal from 2011 to 2016 and was a popular member of Arsene Wenger's squad after joining from Everton.
Arteta's reputation has rapidly grown at the Etihad Stadium, learning his trade under Guardiola after accepting an assistant coaching role in 2016.
City have won back-to-back Premier League titles under Guardiola, and Arteta has been visible on the sideline as one of the Catalan's trusted staff.
Merson added Arteta's credentials do not stack up, despite his recent achievements and history:
"One of the major factors with Arteta being linked with the job is that he's worked closely under Guardiola, and he used to play at Arsenal. Other than the fact he won't get lost on the way to training, I don't know what else he brings to the table.
"We've seen how out of his depth Freddie Ljungberg has been in recent weeks. What's the difference between Ljungberg and Arteta other than the fact Arteta has worked under Pep at Manchester City?"
Emery succeeded Wenger in 2018 when the legendary coach resigned, but the former Paris Saint-Germain boss failed to heal Arsenal's deficiencies.
However, Emery did have huge experience as a coach having taken charge at Valencia, Sevilla and Spartak Moscow. Despite this, his knowledge wasn't enough to improve Arsenal's recruitment and results.
Big Premier League sides have recently turned to former players to take charge, with Frank Lampard rejoining Chelsea and Manchester United appointing Ole Gunnar Solskjaer as manager. A return to the capital for Arteta would mirror the current trend of two of England's biggest clubs.
Arteta was a thoughtful tactician on the pitch, and his playing experiences in England, Spain, France and Scotland should be a great benefit to him when he lands his first manager's role.