Looks like Bryozoan, possibly Crisia spp. It's a filter feeding animal, not algae.
Tends to spread in newly set up tanks then slowly dies off as water conditions improve.
I wouldn't worry about it.
Thank you for this reference. The species of Bryozoa that I see on Gulf of Mexico diver collected rock is brick red. For me, it is attractive and durable.
Patrick
Personally i think these creatures are a good thing. They are natural filter feeders. Many people would like to have them incorporated into the biodiversity of their tank. They enter the aquarium as a hitchhiker on live rock and tend to grow in tanks that have a lot of particulate matter. Usually as the aquarists husbandry improves their tank becomes more sterile which starves organisms like these. By dosing bacteria you may actually be feeding them. If you really want them gone i suggest starving them by keeping particulate matter at a minimum with good mechanical filtration. When they're dead you can brush them off. They'll turn to dust and be collected in your filter sock/pad and protein skimmer.
There are natural predators but i'm not sure which predator eats which particular variety of bryozoa. The link below has some good info. Hopefully it doesn't get deleted by RCs filter. http://www.reefkeeping.com/issues/2003-10/rs/
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