McCarthy appeared to bring Foden down inside the penalty area after failing to control a pass and allowing the ball to slip underneath his foot.
The Southampton goalkeeper attempted to win the ball from Foden but made contact with the City forward, who fell to the ground but then quickly got back to feet.
City’s goal-scoring opportunity ultimately came to nothing but Pep Guardiola, his backroom staff and the City bench were incensed with the decision.
Andrew Madley, the VAR, reviewed Moss’ call but stood by the on-field decision.
It is understood that the VAR did not feel footage of the incident conclusively proved that McCarthy had not touched the ball and therefore did not ask Moss to review his decision on the pitchside monitor.
City are looking to return to winning ways after a 2-0 defeat in Sunday’s Manchester derby at the Etihad brought a record-breaking streak of 21 consecutive victories to an abrupt end.
Guardiola’s side were 11 points clear at the top of the Premier League table before kick-off.