To get it out of the way, you have to find a Sperm Whale in that area and blow the Sea Whistle. This part is quite tedious and is recomended you get air before doing it, just the fact that you have to be in the perfect spot so the whale comes. When you get it, the whale will come and fight with the Squid. After that, you may focus on the two creatures fighting, and when you do, it will say, "Deep Sea Battle." You can find these two fighting again, but it is unknown exactly when.