"I created a web app at the request of one of the schools & deans at the University I work for."
The provost has some authority over the deans and schools. Since the application is "owned" by his employer....
Yes, maybe he could continue it "on the side" but he may want to stay employed and if he got the grade information from the school, they can probably shut that down
The grade distribution information is not considered restricted under any FERPA or other policy, but it is considered 'sensitive' and requires an external party to jump through quite a few legal hoops to access.
Edit: I serve at the behest of the Provost. So that was basically the boss/boss saying "we made a mistake, please take that down."