The (over-?)reaction may in part be due to LINE being developed by a Japanese subsidiary of the Korean giant NAVER - I've seen right-wing loonies banging on about Korea stealing all the user data, so nationalist politicians might be wanting a more local solution.
As noted, LINE was already the main COVID telehealth hub, and had plans to be the main online vaccine appointment tool, so that's going to be yet another delay in the already glacial roll-out (hobble-out?) - we've so far had just half a million medical staff injected, and the old folk jabs start in two Tokyo city/wards from the 12th of next month, where they'll get one box each of 1,000 or so shots to inject. I might get mine for Christmas, if I'm lucky.