Amazon and Apple have been a testy duo for a while now. Amazon’s Kindle Fire line has been one of the leading competitors against Apple’s dominant iPad, and a fight between the two companies over the app store name went as far as court. Meanwhile, responses from a series of polls released early in February showed Amazon as the highest ranked company by reputation. Apple had led previously, but dropped to third this year.

It’s clear that the iPhone maker is getting a lot of trouble from Amazon, and one particularly threatening move comes from the retailer’s new cloud player.

The digital music market is growing as traditional purchases of CDs and such at brick & mortar stores decline. Apple has clearly been aware of this, and iTunes was the answer. However, Amazon wasn’t too far behind with its MP3 Store and now a cloud player…

Now, normally, external apps are good for Apple — the company makes a pretty penny from app-related purchases — so having the Cloud Player on iOS should have been a good thing. Unfortunately, Amazon had another trick up its sleeve.

The Cloud Player was made for the iPhone and iPod touch, and it has been completely free, which means Apple doesn’t get a penny from it. Then, there are no in-app purchases — users’ libraries are filled with external purchases from Amazon’s MP3 Store and will never be charged Apple’s fee. Plus, Amazon offers competitive prices.

The situation got even worse for Apple on Wednesday, as Amazon extended the app to include native iPad support, meaning it is as convenient as ever for Apple product users to avoid paying for music and being chained into its ecosystem. This continuing path from Amazon is definite trouble for Apple, as a significant portion of the revenue comes from iTunes.

Here’s how Apple (NASDAQ:AAPL) traded Wednesday:

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