Well, there's dreugh lords and weresharks. Haven't heard of any giant sea serpents but I suppose there might be some in parts of Nirn. They aren't any near Illiac Bay, Vvardenfell, or Cyrodiil though.
That's only because the developers don't know how to create sea monster models. The oceans and bays have always been super empty because they think people who buy the game aren't going to do much piracy in the sea. I don't think it's a lore issue but rather a on-a-strict-time-budget-so-our-expenses-don't-exceed-our-revenue-so-that-we-can-get-this-product-out-to-Gamestop-as-quickly-as-possible issue.