Russo ended six months of speculation about her future by joining Arsenal earlier this week on a free transfer following the expiry of her contract with the Red Devils.
The Gunners have had a long-standing interest in the striker, after having a world record bid for the 24-year-old rejected in January.
Russo starred for England's Lionesses as they won the European Championships on home turf last summer after scoring four goals off the bench, including a sensational backheel against Sweden in the semi-final which won Goal of the Tournament.
Her stellar performances at the Euros meant Russo became one of the faces for women's football in the UK and she scored 10 goals in the Women's Super League last season as United finished in second place.
Russo is expected to be a key player for the Lionesses at the upcoming Women's World Cup and will be hoping to spearhead a title charge alongside Vivianne Miedema and Beth Mead for Arsenal next season.
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However, Williams - who is England's most capped player - is unsure whether Russo's move to Arsenal is a progressive step for the Lionesses star.
Speaking exclusively to talkSPORT, Williams said: "I think it was obvious that was going to be the move that Alessia was going to choose. I did ask the question on my podcast: 'Is that a progressive move for her, given where United are looking to go and progress?' I'm not sure.
"They [Arsenal] certainly have the history behind them, more so than what United do. But she's closer to home. She's back in London [and is] closer to home [and] I think she'll be more comfortable with that.
"If you look at the squad a fully fit Arsenal have [with] the likes of Kim Little, Vivianne Miedema and Beth Mead, I think they certainly have a stronger team and she'll be the main striker there.
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"I think it's a great move for Arsenal. It certainly puts them as title contenders. She'll get more goals at Arsenal than she would have at United, for sure.
"Russo will have her reasons for why she's done it. For Man United, in my opinion, they should have done a lot more to keep hold of her.
"I know once a player has made up their mind on a move, it's quite difficult to keep them. So, I don't want to say United didn't do enough, but look, they've got to the Champions League. In my opinion, there's not really much difference between Arsenal and United at this stage."
Losing Russo is a real blow for United, who have also lost key defender Ona Battle this summer after the Spain international joined Barcelona upon the expiry of her contract.
They are also in danger of losing goalkeeper Earps as well, with the England and Man United number one's deal due to expire in 2024.
Asked whether some of United's key players like Earps and Ella Toone could be considering their future at the club following Russo's departure, Williams said: "I think with [Ella] Toone, she has time on her hands to progress and be in a team that is progressive.
"For someone like Mary Earps - who is in the form of her career probably to date - she'll be wanting Manchester United to show real ambition with some of their signings.
"She spoke at the end of the Liverpool game and she said they need to strengthen in all areas of the pitch [and] they need to make their squad more competitive if they are to compete next year again and challenge for that title.
"I think Manchester United have got a lot to do, in terms of signings. They've obviously just lost their assistant coach [Martin Ho] as well, who I know was hugely respected by the players. They'll have to make big signings.
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"They've lost Ona Battle and Russo, two big players in that team. I'm sure Mary Earps will be looking at it and going: 'Who are we bringing in?' For her, if they don't show any ambition this year, I'm sure Mary will be looking to go to a club that is showing more ambition, for sure."
Fara Williams was speaking to talkSPORT courtesy of LiveScore. Read more from Williams during the Women's World Cup as part of her weekly column on the LiveScore app.