[Van down by the river]

It's definitely not a hydroid as it lacks polyps and a pinnate structure.
It's not a sponge as there's not enough density, as well it lacks porocytes(inhalant pores) and osculum(Exhalant pores).

So what is it? Well it may be Wrangelia argus, but this is a Caribbean species as far as I know. As most Live rock is Indo Pacific I would bet this is a Indo species. It may be another Wrangelia sp.

I believe it may be Asparagopsis taxiformus in a sporophyte stage. This is similar to a "juvenile" stage that can reproduce, never forming the stem structures of adult(gametophyte) forms. Similar to some salamanders that can remain in the larval stage their entire life and reproduce without progressing to their adult form.

Don't get rid of it, it's quite attractive and will most likely not grow to plague proportions. Often sprouts of various red algae are short termed and connected to water quality.
If you do want to get rid of it I'll gladly take it, I'm always looking for something different and interesting.