In any case, the functionality that Labit currently offers doesn't pose a risk to individuals and research groups. Moreover, many labs host their pages on Wix, WordPress, SquareSpace etc. and their university administration doesn't mind. I think that these are the reasons why there were no objections from administration so far.
And a question for you in return.
How important for you is the ability to have a custom domain for your research group? On a scale from 1 to 10.