The Italian giants lost 5-2 at San Siro to Sassuolo, which came in the wake of a 4-0 humiliation by Lazio.
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The result leaves Milan - who won their first title in over a decade last season - 12 points behind league leaders Napoli, who have a game in hand.
Former Chelsea man Fikayo Tomori was absent for the clash, while his title-winning defensive partner Simon Kjaer remained on the bench, seeing academy graduate Matteo Gabbia paired with Pierre Kalulu in defence.
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The duo had rings run round them by Sassuolo's attack, who were 3-1 up away from home by the half hour mark.
Ex-Arsenal and Chelsea striker Olivier Giroud netted a brilliantly-placed header, while former Liverpool man Divock Origi buried a superb strike, but both were in vain.
Instead, Euro 2020-winning Italy winger Domenico Berardi was the star of the show, registering three assists and a goal.
Sassuolo had been without a victory in nine games before the drubbing, while the result leaves Milan on a five game winless run.
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In that streak, Stefano Pioli's champions were knocked out of the Coppa Italia by Torino, while they lost the Italian Super Cup 3-0 to Inter Milan.
Now their title hopes are seemingly over, while their Champions League chances are at risk as they could drop out of the top four.
Things don't get any easier either, with Inter next up in the league, Pioli could be in huge trouble before his side's last 16 Champions League meeting with Tottenham.
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