Ramsdale, the 25-year-old England international, has been on the bench for the Gunners past two games, making way for summer signing David Raya.
Raya joined from Brentford on a £3million loan deal with a purchase option of £27m, and has long been admired by new manager Mikel Arteta.
Arteta has insisted to the media that he will pick his goalkeeper based on tactical reasons, but the fact that Raya has started in both the Premier League and now Champions League has many questioning his statements.
One of those is Friedel, who has the third-most appearances of any goalkeeper in Premier League history, and offered his extensive insight to talkSPORT.
When asked if it's over for Ramsdale if Raya starts this weekend's north London derby against Tottenham, the American replied: "Absolutely.
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"I thought from the second they signed him they signed him to be the new no.1, I don't think you pay that much money for someone with one year left on their contract, I know he signed an extra contract and went on loan, but that was for other reasons.
"I think they really liked Raya so when he became available they pushed for him."
Ramsdale joined Arsenal in the summer of 2021, leaving Sheffield United in a £30m deal.
Last season he almost helped the Gunners to a first league title in almost two decades, which Friedel thinks will see him join another top club where he can play every match.
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"It's very harsh on Ramsdale but it's the coach's decision," the former Liverpool and Tottenham keeper said.
"I'm assuming Ramsdale at the end of this season will end up having to do what Matt Turner did at the end of the previous season and find another place to play.
"I know it's early and people will say you have to see what he does, but I think Raya was brought in as the no.1, you thought maybe they could be swapping if they'd played Ramsdale in the Champions League, but that didn't happen.
"I think we'll see Raya in goal and he'll be the incumbent no.1 this season."
Friedel was reminded of a similar situation when he joined Spurs and had competition in goal, but explained the difference is that he knew that was the deal coming in.
"I wasn't frustrated at Spurs because I was told what was happening," he said, "I'm pretty certain Raya was told something and now it's happening.
"If I were Ramsdale I'd be really frustrated, but the good news for him is that he's a top goalkeeper and I think he'll find somewhere to land and it will be a top club, he played really well last season.
"Mikel Arteta said he wants to be two or three players deep at every position, but I think at goalkeeper it's tough to have that, I think your no.1 needs to know you're the no.1 and then you'll get the best out of them.
"I think it's really important for the no.1 to play with the back four on a consistent basis and if you are going to swap I don't think that works very well.
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"If your goalkeeper does make mistakes you have to back him, you back him because he's your no.1 and every goalkeeper is going to make mistakes.
"It's really difficult to play as a goalkeeper if you're thinking every time I make a mistake I'm going to be dropped, I don't think that's a good psyche."