The kraken in Sea of Thieves is real and players will be able to fight it, according to Eurogamer.
New images leaked to Eurogamer show the kraken in full force attacking boats and drowning players in the open seas. Player's apparently can't predict when or where the Kraken will strike, but they will get notified about it when it is in the local area.
Players will know that the kraken is in the area when the nearby waters turn murky black. An oily fluid effect will act as a small window to either escape from the kraken or prepare to fight it. If you don't escape in time, the kraken will emerge and attack your vessel by wrapping its tentacles around the boat, punching holes through them, and throwing players around like ragdolls.
Players who are sailing nearby a kraken attack will have the option to either help out the other pirates to defeat it, or side with the kraken to try and steal any loot from the stragglers.
To defeat the kraken, players will apparently need to attack the eight tentacles spawning from the ocean and hit its central brain that controls everything. Rare also have plans to evolve the kraken in the future and add more features over time.
There's also a possibility Rare will add a progression system around kraken hunting in the future.