Role in the film
The Krakken is first seen attacking a Norwegian cargo ship located somewhere in the North Atlantic. A few days later, upon Kida's first trip to the surface and Milo's return to the surface along with Vinnie, Mole, and Audrey, the Krakken attacks their ship but is eventually foiled by Milo and his friends in their sub pods, destroying the beast with numerous missiles fired from their pods. According to Inger Alyyson, the innkeeper of a nearby fishing village, their magistrate Edgar Vulgud made a deal with the beast to live forever but forgot to ask for eternal youth. The sun in their village hasn't shone since the beast went loose in the sea.
Upon being fatally damaged by missiles on a subpod, the Krakken faded away. Vinny commented that "Mr. Squid was a little hocus pocus himself." The Krakken's defeat also killed his minion, Vulgud.
Hypnosis: The Kraken could put anyone in a trance for its, or Vulgud's service. They best way to undo this is to "distract" the victim (in Vinny's case, he was hit on the head by a wrench.)
Prolonging Life: The Kraken kept Vulgud alive way past his normal lifespan.