Competition between reef-building corals and benthic algae is of key importance for reef dynamics. These interactions occur on many spatial scales, ranging from chemical to regional. Using microprobes, 16S rDNA pyrosequencing and underwater surveys, we examined the interactions between the reef-building coral Montastraea annularis and four types of benthic algae. The macroalgae Dictyota bartayresiana and Halimeda opuntia, as well as a mixed consortium of turf algae, caused hypoxia on the adjacent coral tissue. Turf algae were also associated with major shifts in the bacterial communities at the interaction zones, including more pathogens and virulence genes. In contrast to turf algae, interactions with crustose coralline algae (CCA) and M. annularis did not appear to be antagonistic at any scale. These zones were not hypoxic, the microbes were not pathogen-like and the abundance of coral-CCA interactions was positively correlated with per cent coral cover. We propose a model in which fleshy algae (i.e. some species of turf and fleshy macroalgae) alter benthic competition dynamics by stimulating bacterial respiration and promoting invasion of virulent bacteria on corals. This gives fleshy algae a competitive advantage over corals when human activities, such as overfishing and eutrophication, remove controls on algal abundance. Together, these results demonstrate the intricate connections and mechanisms that structure coral reefs.